In addition to major expansions by TSMC and Samsung, Intel is also building huge factories, with some analysts already seeing the chip bubble burst.
Intel announced last Friday that it is willing to spend as much as $ 100 billion to build the world’s largest chip-making complex in Ohio.
As electronics manufacturers around the world continue to be severely hampered by the chip crisis (excessive demand), semiconductor manufacturers are expanding their capacity with huge forces and pulling in new plants, preferring to exploit the fears of some regions lagging behind and shutting down. The EU, China and Japan are also providing huge subsidies for their plants. In addition, many players are afraid of being subject to a U.S. export ban in the next stages of trade wars, so investment is indeed diversified.
Intel is trying to profit from this by re-establishing a dominant player in chip manufacturing where possible and reducing America’s dependence on Asian manufacturing. The initial $ 20 billion investment is still the largest record in Ohio’s history, but by the time the planned 8 plants are pulled up, there is talk of $ 100 billion. Intel and Pat Gelsinger plan to make this chip complex the world’s largest semiconductor plant.
The deficit is not easing yet, not even in 2023
While chip makers are expanding capacity with steam power, Intel’s new plants aren’t helping to improve the situation either, as it will take years to set up such plants. Gelsinger reiterated that the chip deficit will remain in 2023, according to Intel’s calculations.
Incidentally, in order to drastically increase chip production, the Biden government would support the sector with $ 52 billion in capital, provided Congress congresses as well. According to the official prospectus, the U.S. government will soon announce a competition law that would boost the semiconductor sector and its supply chain investments.
Intel’s recent big announcement was also welcomed by President Biden, who indicated: “China will do its utmost to gain access to the global market and outperform the others.” According to Trade Minister Gina Raimondo, the current supply chain is overly dependent on countries and conditions around the world.
Gelsinger says Intel is stepping up its planned investment in Ohio without government support, at most much slower and with slower growth. With the two $ 20 billion Arizona plants, Intel already has six plants in the Phoenix area.
The European Intel factory
Gelsinger reaffirmed that Intel would also set up new plants in Europe. Up to $ 95 billion in investment was promised for this in September (over 10 years), but eventually the location of the two new EU chip factories was not announced by the end of 2021. Despite the expected investment in Ohio, Intel still wants European plants to announce their locations next month. However, experts say there is not that much pressure on the company now, following Friday’s announcement.
By the way, Gelsinger also expects the EU to put together its chip law, after which European investments will be announced. A European chip law would reduce the region’s significant semiconductor dependence on Asian players (a few non-European manufacturers) by supporting the construction of large local chip factories. The European Commission will put together a proposal back in February, which will be approved in a hurry for the benefit of paralyzed European carmakers. In addition, the EU’s chip demand will double according to the EC in the next decade. According to the EC, the current dependence and uncertainty cannot be afforded by the EU. By 2030, the region wants to provide 20 percent of the world’s chip production. Therefore, the ECA chip law will deal with state subsidies, new factories, deficit and crisis management, and research and development.
As for Intel, it has already negotiated with several European governments, it would take factories to more regions, and Germany and Italy are currently in the lead. In addition, there are no more specific plans, according to Gelsinger, but many are urging the company, as there is not necessarily a chance for significant production within 3-4 years if the factories do not start building immediately.
Earlier, Intel has stepped up chip production in China anyway, but the Biden government has made a national security issue out of the strategy and halted Intel’s plans.
Can the US impose a chip export ban on Russia?
According to recent reports, chip production is such a primary item in politics that the White House has informed the U.S. chip sector that if Ukraine and Russia continue to deteriorate, the U.S. could subject Russia to the same export restrictions as Huawei. Thus, Russian companies would not have access to anything that is made in America or with American technology. The Russians have also responded to the reports: they say the U.S. accusations are baseless, and such restrictions would really only hurt the U.S. economy. The supposed intention is seen as a possible continuation of the U.S. strategy to oust potential rivals from the market. According to Rostec, the country has already increased domestic component production in response to other previous sanctions – and no imported components are used to manufacture military equipment.
The chip bubble is swelling
The mega-investments by Samsung, TSMC and Intel, according to industry leaders and analysts, will only be able to balance supply and demand in the chip sector in years to come. While the industry expects all aspects of people’s lives to be digital, Gartner analyst Alan Priestley, for example, sees the situation differently. He thinks the industry is really growing and maybe the metaverse craze will quench the hunger in the semiconductor industry, but even so, you can see that the big chip bubble is already in the works.