Intel warns Ohio factory could be delayed because Congress is dragging its feet on funding

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Patrick Gelsinger, Intel CEO, at the WEF in Davos, Switzerland on May 23rd. 2022.
Adam Galica | CNBC

A large chip factory currently in the early stages of being built outside of Columbus, Ohio, could see its scope scaled back or construction delayed depending on what Congress does with the CHIPS Act, Intel said in a statement on Thursday.

The facility was announced in January and would be the most significant expansion of U.S.-based semiconductor manufacturing in years. Intel estimated the plant could cost as much as $100 billion and committed an initial investment of $20 billion.

“We are excited to begin construction on a new leading-edge semiconductor manufacturing plant in Ohio and grateful for the support of Governor DeWine, the state government and all our partners in Ohio. As we said in our January announcement, the scope and pace of our expansion in Ohio will depend heavily on funding from the CHIPS Act,” an Intel spokesperson said in a statement.

“Unfortunately, CHIPS Act funding has moved more slowly than we expected and we still don’t know when it will get done. It is time for Congress to act so we can move forward at the speed and scale we have long envisioned for Ohio and our other projects to help restore U.S. semiconductor manufacturing leadership and build a more resilient semiconductor supply chain,” the statement continued.

Part of Intel’s plan for the facility included subsidies from the U.S. government from the CHIPS Act, which could fund computer chip manufacturing with $52 billion from the U.S. Government to encourage semiconductor manufacturing and research. The bill was passed by the Senate last summer but has yet to be signed into law.

The CHIPS Act has been stalled as lawmakers seek to work out differences between two competing versions of legislation passed in each chamber over roughly the last year. The semiconductor funding is just one part of a broader package that must make its way through the negotiation process.

Intel is still committed to the $20 billion investment it announced earlier this year, a spokesperson told CNBC, but the larger $100 billion investment is uncertain if the CHIPS Act isn’t passed by Congress. Intel CEO Pat Gelsinger is in DC on Thursday to discuss the bill with lawmakers.

Groundbreaking for the Ohio factory is still scheduled for the fall, the spokesperson said.

The Biden administration has hailed the Ohio factory as an example of the president’s efforts to increase manufacturing capacity in the U.S. Gelsinger was a guest of Biden’s at the State of the Union earlier this year.

“If you travel 20 miles east of Columbus, Ohio, you’ll find 1,000 empty acres of land. It won’t look like much, but if you stop and look closely, you’ll see a ‘Field of dreams,’ the ground on which America’s future will be built. This is where Intel, the American company that helped build Silicon Valley, is going to build its $20 billion semiconductor ‘mega site’,” Biden said in the speech.

Most manufacturing of high-end chips currently takes place in Taiwan and South Korea, and U.S. officials say that increasing the amount of semiconductors fabricated on U.S. and European soil is important for national security.

Intel shares were little changed on the news and were down less than 1% during trading on Thursday.

— CNBC’s Lauren Feiner contributed to this story.

This post has been syndicated from a third-party source. View the original article here.

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