Slow distribution of federal funds contributes to a delay in the construction of Intel's Ohio manufacturing facility.
It’s been almost two years since Intel announced plans to develop a massive and advanced fabrication facility in the state of Ohio, rather than its usual location in Arizona. Now there are reports of a delay.
Fabs are never cheap or easy to build, and the Ohio plant was especially pricey at $20 billion. Intel was counting on a little help from the federal government in the form of funds that are part of the CHIPS Act, which is meant to improve American competitiveness in the semiconductor manufacturing field. However, the company has run into unexpected challenges, such as a downturn in sales since the deal was announced and the slow disbursement of CHIPS Act funds, according to The Wall Street Journal.
Intel has paused construction on fabs due to downturns in demand more than once, but that’s not the only reason being cited for the delay. Funds from the CHIPS Act have yet to be distributed despite the bill being signed into law in August 2022.
In a statement emailed to Network World, Intel said: “While we will not meet the aggressive 2025 production goal that we anticipated when we first announced the selection of Ohio in January, 2022, construction has been underway since breaking ground in late 2022 and our construction has been proceeding on schedule. Typical construction timelines for semiconductor manufacturing facilities are 3-5 years from groundbreaking, depending on a range of factors.”
It went on to say: “We remain fully committed to the project and are continuing to make progress on the construction of the factory and supporting facilities this year. As we said in our January 2022 site-selection announcement, the scope and pace of Intel’s expansion in Ohio may depend on various conditions.”
Intel has made progress on the Ohio plant despite the delay in funding. The Journal reports that Intel says it has put in more than 1.6 million hours of labor so far, with 800 people working on the site and several thousand people are expected to be added to the worksite by the end of the year.
Galen Zeng, senior research manager for IDC Asia, said controlling construction and operational costs is important for Intel due to the scope of the facility. “Constructing an Ohio manufacturing site requires significant investment and is part of Intel’s long-term plan. Also, Intel is eventually planning to spin off its IFS to increase its competitiveness. However, before IFS gradually perfects its PDK (process design kit), the uncertainty of client/market grasp may lead Intel to adopt a more conservative strategy in cost control,” he said via email.
