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Intel Fab Fights Microchip Shortage

Intel’s $20B Fab Investment Combats the Chip Drought

Jan. 24, 2022
Understanding the severity and scope of the long term shortage.

On Friday, Jan. 21, tech giant Intel announced a $20 billion investment into a new microchip production facility or “fab” near Columbus in Licking County, Ohio, the largest single private company investment in state history. This mirrors Intel’s announcement in March 2021 about investing $20 billion for a pair of new plants in Arizona.

The chip shortage arguably caused by the COVID pandemic made painfully clear the weaknesses in the global silicon supply chain dependent on overseas transport from Korea and Taiwan, the world’s largest microchip producers. A drought in Taiwan didn’t help as the chip production process requires voluminous amounts of water-reduced typical levels of output. Taiwan Semiconductor Manufacturing Company, one of the largest Taiwanese chip manufacturers, in April 2021 announced a three-year plan to invest $100 billion in new fab construction.

Automobile production suffers during the ongoing shortage. Car sales dropped in the E.U. and the UK; Honda and Toyota downgraded sales forecasts by double digits and Nissan delayed the launch of its first 100% electric vehicle; surveys in early 2021 predicted stalls in US vehicle production and manufacturer Stellantis announced suspension of production at five factories that affected Jeep, Chrysler, and Dodge

At the Intel plant announcement, The Ohio State University President Kristina M. Johnson, an electrical engineer who worked with semiconductor manufacturers in her pre-academic days, noted that visitors to the event likely passed empty car lots as they drove to the site from Columbus, saying that $30,000 cars were going unsold because of $2 microchips.

Some automobile manufacturers weathered the storm, however. GM reported high Q1 profits in 2021 and while the company did delay its new electric car Nissan also made high profit predictions.

Continuing Challenges and New Solutions

The amount of other industries, like consumer electronics and robotics, that also depend on chips exacerbates the problem. Apple, for examples, cut its iPhone 13 output forecast owing to the shortage. The severity of the chip shortage has prompted government action via semiconductor summits at the White House and negotiations between the US and the EU.

Several companies besides Intel announced new fab construction, doing their part to fight the ongoing chip shortage. GlobalFoundries Inc. in July 2021 announced a $1 billion expansion for a new fab at the company’s campus in Malta, New York and forged a strategic collaboration with Ford to boost chip manufacturing and technology development. Texas Instruments in November 2021 also announced plans to invest as much as $30 billion for up to four new fabs in Sherman, Texas.

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