Intel’s $20B Semiconductor Factory Won’t Ease The Chip Shortage Yet

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Ollie Martin
Updated: 21 Jan 2022

Key points:

  • A global shortage in semiconductors is pushing Intel to ramp up production levels
  • The two new Ohio-based facilities will cost around $20B /li>
  • Whilst production levels will eventually loosen the tight semiconductor market, it will take some time to get there

Semiconductors have become a critical component in the landscape of modern technology; Intel (NASDAQ: INTC), a long-standing specialist in the field has just announced a $20B investment for the production of two further semiconductor chip-making plants in Ohio.

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The investment not only significantly bolsters the company’s position in the semiconductor industry, but also looks towards easing the much wider global shortage – a problem that has impacted a significant number of tech companies, with EV production taking a substantial blow. 

As chip-making becomes more and more rudimentary with such rapid technological advancements, the move signals Intel’s desire to maintain industry dominance in the face of emerging competition, in particular, the reliance on the well-cemented Asian manufacturers.

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Patrick Gelsinger, Intel CEO, briefly stated:

“These factories will create a new epicenter for advanced chipmaking in the U.S. that will bolster Intel's domestic lab-to-fab pipeline” 

It’s not worth getting excited just yet; such a massive production endeavor could take years to build, meaning the global semiconductor shortage will most likely remain for some time; Gelsinger once stated that the shortage is expected to last into 2023, but it could well be longer, meaning the US market’s reliance on the Asian markets is not likely to drastically ease any time soon. 

In another push for the semiconductor market, the Biden administration is hoping to convince Congress for $52B in funding, but again, recent struggles with the ‘Build Back Better’ scheme lead me to believe that this won’t reach fruition without some sort of struggle. 

Intel is set to release its earnings next week, and it will be interesting to see how the chipmaker has fared during such a global shortage. Endeavors to ramp up production might appear swamped given the wider picture.

 

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