Updated March 20th, 2024 at 16:15 IST

Intel to invest $100 billion to boost chip manufacturing in US

The allocation of federal funds to Intel under the CHIPS Act was announced by the US government, prompting a 4% surge in the company's shares.

Reported by: Business Desk
Intel | Image:Unspalsh
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Intel’s investment in the US: Intel is planning to invest $100 billion across four states in the United States to construct and expand factories. The move follows the company securing $19.5 billion in federal grants and loans, with an additional $25 billion in tax breaks in sight.

The focal point of Intel's plan is the establishment of what CEO Pat Gelsinger termed "the largest AI chip manufacturing site in the world" near Columbus, Ohio. This project is slated to commence as early as 2027.

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The allocation of federal funds to Intel under the CHIPS Act was announced by the US government, prompting a 4 per cent surge in the company's shares during premarket trading.

In addition to the Ohio facility, Intel intends to revamp existing sites in New Mexico and Oregon while expanding operations in Arizona. The expansion aligns with President Joe Biden's initiative to increase advanced semiconductor manufacturing within the US.

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Intel's pursuit of government aid comes in the wake of challenges to its once-dominant position in semiconductor manufacturing. Losing ground to competitors like Taiwan Semiconductor Manufacturing Co (TSMC) in the 2010s led to a decline in profit margins.

In 2021, Gelsinger unveiled a plan to reclaim Intel's leadership status, underlining the necessity of governmental support to make the endeavour financially viable.

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Approximately 30 per cent of the $100 billion investment will be allocated to construction expenses, with the remainder earmarked for procuring chipmaking equipment from various suppliers. These tools are crucial for bringing the Ohio facility online, although Gelsinger cautioned that market fluctuations could impact the timeline.

Despite the assistance received, Intel anticipates the need for additional funding to solidify the US's position in semiconductor manufacturing. Gelsinger stressed that the industry's revival would require sustained efforts beyond the immediate future.

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Analysts underscore the significance of Intel's resurgence for US interests, noting its pivotal role in terms of workforce, technology, and supply chain within the country. While competitors like TSMC and Samsung are also establishing a presence in the US, Intel remains a linchpin for domestic semiconductor capabilities.

(With Reuters inputs)

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Published March 20th, 2024 at 16:15 IST