Intel to build chip factories in Ohio

Company will invest $20 billion as a global shortage highlights the risks of reliance on manufacturers in Asia.

Intel will invest $20 billion in a new computer chip facility in Ohio amid a global shortage of microprocessors used in a wide variety of products, including phones, cars and video games.

After years of heavy reliance on Asia for the production of computer chips, vulnerability to shortages of the crucial components was exposed in the U.S. and Europe as they began to emerge economically from the pandemic.

The U.S. share of the worldwide chip manufacturing market has declined from 37% in 1990 to 12% today, according to the Semiconductor Industry Assn.

Two chip factories on the 1,000-acre site in Licking County, just east of Columbus, are expected to create 3,000 company jobs and 7,000 construction jobs, and to support tens of thousands of additional jobs for suppliers and partners, the company and local and state officials announced Friday.

Construction is expected to begin this year, with production coming online at the end of 2025.

Shortages of chips have crimped the ability of U.S. automakers to produce vehicles. Last year, General Motors was unseated by Toyota as the nation’s topselling automaker for the first time.

The U.S. and Europe are pushing to aggressively build chip manufacturing capacity and reduce reliance on producers that are now mostly based in Asia.

Most big semiconductor companies are dependent on chips produced in Asia, particularly in Taiwan.

Taiwan leads the world in chip production, accounting for 22% of global manufacturing capacity, followed by South Korea with 21% and Japan and mainland China each with 15%, according to the semiconductor association.

Several chipmakers last year signaled an interest in expanding their American operations if the U.S. government is able to make it easier to build chip plants.

Chipmakers are diversifying their manufacturing sites in response to the shortages. Samsung said in November that it planned to build a $17-billion factory outside Austin, Texas.

Micron Technology, based in Boise, Idaho, said it would invest $150 billion globally over the next decade in developing its line of memory chips, with a potential U.S. manufacturing expansion if tax credits can help make up for the higher costs of American manufacturing.

Demand for computer chips continues to grow.

Lawmakers have been urging House and Senate leaders to fully fund a law meant to address the semiconductor shortage. They want Congress to fully fund the $52-billion CHIPS for America Act, allowing for stateside investment in semiconductor factories.

Not only has the chip shortage disrupted the U.S. economy, it is creating a vulnerability in the country’s defense system because 8 of every 10 chips are produced in Asia, lawmakers say.

Separate federal legislation also under consideration would create a new tax credit for investment in semiconductor manufacturing facilities.

Shortages during the pandemic highlighted the need for more manufacturing capacity in the U.S and for becoming less reliant on Asia, said Glenn O’Donnell, an analyst at Forrester Research.

“Your two biggest producers are Taiwan and South Korea and both are vulnerable spots on the world stage,” he said.