Intel pauses Ohio chip site development, citing delays in US CHIPS act subsidies

Intel has indefinitely delayed its planned development of a $20 billion chip production site in Ohio, pointing to the lack of action by congress to pass funding the company sees as crucial to the project.

The CHIPS for America act would provide $52 billion in funding for semiconductor manufacturing, and was drafted amidst national security concerns over America’s reliance on other countries for this crucial industry.

Intel had planned to follow the initial investment of $20 billion with a potential $100 billion over the next decade, but has since lobbied heavily for the subsidies and has suggested that without these the size of the project is in doubt.

“Unfortunately, CHIPS Act funding has moved more slowly than we expected and we still don’t know when it will get done,” said the company, in a statement.

There are also fears by lawmakers that without the funding, Intel could focus more on their expansion into Europe, with sources suggesting the company is seeking to prioritise projects with the best chance of receiving support in the form of subsidies, according to the Wall Street Journal.

In March, Intel announced a €33 billion investment for European manufacturing and R&D, with an initial investment of €17 billion in a semiconductor plant in Germany. In all, the company has indicated it could invest €80 billion in Europe within the next decade.

These plans are to receive support from the European Union’s own €43 billion Chips Act, with €2.7 billion already allocated to support Intel’s German plant in 2022 alone.

Just a few months ago Morris Chang, the founder of rival chip manufacturer TSMC, publicly dismissed the Ohio plant “an exercise in futility”, warning that the CHIPS act did not provide enough funding in order to establish the kind of production that Intel seeks.

The announcement comes as a blow not just to the Ohioan economy, which had looked forward to 3,000 permanent jobs plus opportunities for construction firms, but also to the plans of the Biden administration, which has heralded the expansion in semiconductor production as key to America’s international reputation.

In this year’s State of the Union address, President Biden had specifically mentioned the project, calling the prospective site “a ‘Field of dreams,’ the ground on which America’s future will be built.” It is now clear that until the bipartisan funding can be provided, this plan will remain on hold.