Has Intel gone too far with its Ohio fab 'delay' stunt?

With construction unceremoniously underway, x86 giant may have overplayed its hand

Comment The way Intel has been talking about the status of its $20 billion Ohio fab project, you would be forgiven if you assumed that construction on the Midwest mega-site has been delayed in light of Congress struggling to pass a large subsidies package that would support new American chip factories.

When Intel delayed a groundbreaking ceremony for the Ohio manufacturing site two weeks ago out of frustration over the subsidies inaction, some headlines may have given you the impression the semiconductor giant was putting off construction entirely.

However, an Intel spokesperson made it clear to The Register and others at the time that the start date for construction had not changed.

Some mainstream press perpetuated the idea that a delayed ceremony meant a delayed project altogether. Yet, the groundbreaking ceremony is just that: a ceremony, where officials scoop up some dirt for the cameras while construction crews in the background do the real work.

Intel decided to lean into the delay narrative, with CEO Pat Gelsinger last week saying, "The idea of delaying ... this sucks... I am not a delay guy." All of this helped feed the idea that Intel actually is delaying construction at the Ohio mega-site.  

But Intel confirmed that it started construction on its Ohio site in the town of New Albany last Friday, a few days after Gelsinger made his comments, as reported by multiple local news outlets. Construction may have even started sooner, according to one local account.

Intel naturally feels frustrated that the US Congress hasn't approved the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, which will provide more than $50 billion in semiconductor subsidies, when the European Union, Japan, and other governments have moved ahead with their own subsidies to promote domestic growth of semiconductor manufacturing.

Still, Intel may have gone too far with its ceremony delay stunt and making it seem like the Ohio project is in greater peril than it actually is.

The commotion has already prompted Ohio officials to reassure locals that Intel's project hasn't been delayed.

But the bigger issue is that Intel has eclipsed its own messaging for what's really at stake with Congress failing to pass the CHIPS Act. Specifically, lawmakers have to reconcile the Senate’s United States Innovation and Competition Act and the House's America Competes Act, which include the CHIPS Act funds, and so far they are unable to decide on the final wording for President Biden to sign.

Intel has said from the beginning, when it first announced the Ohio project in January, that "the scope and pace of our expansion in Ohio will depend heavily on funding from the CHIPS Act." The company even reiterated this point to us when we asked about the groundbreaking delay.

In an interview with CNBC last week, Ohio Governor Mike DeWine (R) said that Intel has succinctly communicated what this means:

  • Without subsidies, Intel may only invest $20 billion to build two fabs in Ohio over the next several years.
  • With subsidies, Intel's investment in Ohio could go up to $80 billion to $100 billion "within a relatively short period of time," enabling it to build a total of eight fabs.  

This is more nuanced than a simple delay in construction, and it's where we think Intel may have fumbled in urging Congress to pass the CHIPS Act.

Even DeWine seemed to have a read on Intel's potential politicking, telling the media he thinks the company may have delayed the groundbreaking ceremony as a negotiating tactic to make Congress act:

I don't think they wanted to be in a position where they would say to Congress, we're breaking ground, and Congress still hadn't passed the CHIPS Act. I think it's a little bit of maybe leverage or a little bit of, hey, let's pay attention to this.

Intel's words and actions matter because it has promised to become an economic engine for the state of Ohio. The corporation has said the initial phase of the fab mega-site would result in the creation of 3,000 jobs at Intel as well as 7,000 construction jobs, plus tens of thousands of additional jobs necessitated by Intel's local suppliers and partners.

Intel made this commitment with the assumption that Congress would pass the CHIPS Act in a timely manner and unlock $52 billion in subsidies, which would support Intel and other companies building new fabs in the US.

The frustration over Congress not taking action yet for several months is understandable, but Intel needs to ensure it can effectively communicate the true impact of such inaction. ®

Similar topics


Other stories you might like

Biting the hand that feeds IT © 1998–2022