[Image above] A rendering showing early plans for Intel’s new manufacturing mega-site in Licking County, Ohio. Credit: Intel Corporation

Though rumor recently turned into a less-than-ideal reality for the singer of a certain chart-topping song, another rumor that has been floating around my business newsletters for weeks received a very satisfying confirmation this past Friday—semiconductor chip manufacturer Intel is committing $20 billion to build a manufacturing mega-site in New Albany, on the outskirts of Columbus, Ohio.

YouTube video
Credit: NBC4 Columbus, YouTube

For those outside the industry, the weight of this announcement might not be immediately clear. So, today we’ll look at some of the big events that have affected the semiconductor industry in recent years and how Intel’s announcement fits into the narrative.

Semiconductor chips: An essential part of electronics

The topic of semiconductors has captured media headlines frequently over the past year due to a shortage driven by the COVID-19 pandemic. But what are semiconductors, and specifically semiconductor chips?

A semiconductor is a material that has an electrical conductivity value falling between that of a conductor (such as many metals) and an insulator (such as glass). Examples of semiconductor materials include silicon, germanium, gallium arsenide, and elements near the so-called “metalloid staircase” on the periodic table.

In electronics, semiconductor materials are used as the basis for semiconductor chips, i.e., a set of electronic circuits that rest on top of a small flat piece (or “chip”) of semiconductor material, usually silicon. These so-called integrated circuits are orders of magnitude smaller, faster, and less expensive than those constructed of discrete electronic components.

There are different ways for industry to categorize types of semiconductor chips. When categorized by functionality, there are memory chips, microprocessors, commodity integrated circuits (“standard chips”), and complex systems-on-a-chip. When categorized by types of integrated circuitry, there are digital, analog, and mixed chips.

Example of a microprocessor-type semiconductor chip. Microprocessors contain one or more central processing units (CPUs), which provide the instructions and processing power that a computer needs to do its work. Credit: Yaca2671, Wikimedia (CC BY-SA 3.0)

The ongoing semiconductor chip shortage and need for domestic manufacturing

When the COVID-19 pandemic started upending everyone’s lives in 2020, several factors culminated into a global semiconductor chip shortage.* In the January/February issue of the ACerS Bulletin, we featured a report by BCC Research that looked at these factors, including a sudden demand for consumer electronics, disruption in the supply chain caused by the pandemic, ongoing trade wars between countries, and natural disasters and industrial accidents causing semiconductor fabrication plants to close, among other factors.

This shortage is causing severe problems for industries that rely on electronics. For example, the United States Commerce Department just issued a report this week that found manufacturers’ median chip inventory levels have plummeted from about 40 days’ supply in 2019 to less than five days, according to a survey of 150 companies worldwide.

These tight margins are being reflected in the products available to consumers. The automotive industry is a prime example—General Motors, Honda, Nissan, and Stellantis reported significant declines in sales in later 2021 as chip shortages forced them to idle plants, leaving dealers with few vehicles to offer customers.

As a result, much discussion has turned to bolstering domestic manufacturing of semiconductor chips to avoid such severe shortages in the future. As a recent fact sheet released by the Biden-Harris Administration notes, “The United States used to lead the world in global semiconductor manufacturing. But in recent decades, the U.S. lost its edge—our share of global semiconductor production has fallen from 37 percent to just 12 percent over the last 30 years.”

The Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act is one piece of legislation that looks to bolster domestic semiconductor chip production. The act would establish a set of programs to provide incentives and encourage investment in domestic R&D and manufacturing of semiconductor chips.

While the CHIPS Act was approved in principle as part of the fiscal year 2021 National Defense Authorization Act, it did not receive any funding. The Senate included $52 billion in funding for the CHIPS programs in the U.S. Innovation and Competition Act (USICA), which passed in June 2021, but the House has not yet passed its version of the bill.

*NOTE: The chip shortage is not affecting all types of semiconductor chips in the same way. Learn more about how the shortage is affecting different types of chips in this MarketWatch article.

Intel’s plans for Ohio

In the midst of the ongoing shortage and funding deliberations, Intel’s announcement about building a manufacturing mega-site in New Albany is a major demonstration of the commitment that U.S. companies are making to bringing semiconductor manufacturing stateside.

Intel’s immediate plan is to build at least two semiconductor fabrication plants, or fabs, on a 1,000-acre site. These fabs would account for a third of the more than 3,000 acres that the city of New Albany is annexing from Jersey Township in Licking County to Intel.

Left, an aerial photo of land in Licking County, where Intel plans to build its manufacturing mega-site. Right, a rendering showing early plans for the fabs. Credit: Intel Corporation

Intel will use these fabs to research, develop, and manufacture its most cutting-edge computer chips, employing at least 3,000 people. Construction will begin this year, and the plant should be operational by 2025. Intel plans to employ green building principles during construction and hopes to power the new factories with 100% renewable energy and achieve net positive water use.

In addition, Intel says it plans to spend $100 million over the next 10 years to establish the Intel Ohio Semiconductor Center for Innovation, a partnership with universities and community colleges to build semiconductor-specific curricula.

While these initial plans are ambitious, Intel chief executive Pat Gelsinger hinted that the site could eventually grow to accommodate eight chip fabs, with spending potentially reaching around $100 billion over the next decade.

It is believed that this mighty goal, though, will rely on Congress funding the programs authorized in the CHIPS Act. And it appears Intel’s announcement may have kicked Congress into high gear—just hours after Intel made its announcement, House Speaker Nancy Pelosi said that the House will soon introduce its version of USICA, which is expected to contain funding for the CHIPS programs as well.

Learn more about the chip manufacturing process in the videos below. (The first video provides a broad overview of the process, while the second video looks at the electronic circuits placed on the chip.)

Update 01/31/2022 – On Jan. 25, 2022, the U.S. House of Representatives unveiled a legislative package called the America COMPETES Act of 2022, their long-awaited full response to the Senate’s USICA. Both acts would directly appropriate $52 billion for the semiconductor production and R&D initiatives that were authorized in CHIPS.

Update 02/04/2022 — On Feb. 4, 2022, the U.S. House of Representatives passed the America COMPETES Act of 2022.

YouTube video
Credit: Bosch Global, YouTube
YouTube video
Credit: Intel, YouTube

Author

Lisa McDonald

CTT Categories

  • Electronics
  • Manufacturing

Spotlight Categories

  • Member Highlights