On March 20, 2024, Intel and the White House announced Intel will receive $8.5 billion in federal subsidies to support Intel’s semiconductor plants in the United States. This grant is the largest award announced under the CHIPS and Science Act (CHIPS Act) to date. The deal also includes another $11 billion in loans.
Although the Department of Commerce and Intel did not comment on how the grant will be split, it is clear much of the grant money will be used to support Intel’s build out of two New Albany, Ohio facilities, as well as expand Intel’s current plants in Arizona, New Mexico, and Oregon.
Although the receipt of the grant money is positive news for the facilities in New Albany, in the same week, Intel reported in its annual report to the Ohio Department of Development that it will not meet initial deadlines to begin operations. Intel’s Ohio facilities were first slated to be completed in 2025, but the annual report states the facilities will now be finished with construction between 2026 and 2027 before becoming operational between 2027 and 2028.
The CHIPS Act and Chip Industry
In 2022, the CHIPS Act was passed and allocated $52.7 billion to American semiconductor initiatives, including: $39 billion for manufacturing incentives, $2 billion for legacy chips in automobiles and defense, $13.2 billion for R&D and workforce development, and $500 million for international security and semiconductor supply chain activities. It also included a 25% investment tax credit for semiconductor manufacturing and related equipment capital expenses.
Following the CHIPS Act, several chip manufacturers announced plans to build manufacturing facilities throughout the U.S. One of those manufacturers, Intel, announced plans to establish two chip production facilities in Columbus, a $20 billion project. Intel broke ground on the project in September of 2022 and has been working tirelessly on the project since.
Although Intel has not clearly identified the cause for the delays, Intel representatives state the Ohio facilities and construction are moving “full steam ahead.”
Next Steps in the Chip Manufacturing Industry and its Effect on Ohio
Despite delays, Intel’s annual report to the Ohio Department of Development shows Intel is holding up its end of the bargain and investing in Central Ohio.
The project is the largest single private sector company investment in Ohio’s history. At the time Intel announced the project in September 2022, it anticipated 7,000 construction jobs through the build. Upon facility completion, Intel anticipates it will create 3,000 direct Intel jobs, totaling in roughly $405 million in annual payroll, and more than $20 billion in fixed asset investment.
As of Dec. 31, 2023, Intel reported it had 69 employees from 14 Ohio counties working at the project site, and construction workers from 75 of Ohio’s 88 counties have contributed to the project to date, although those workers are not direct employees of Intel. The employment numbers are expected to increase by the end of this year.
Intel’s annual report also shows that Intel has spent approximately $1.5 billion through Dec. 31, 2023; and has an additional $3 billion contractually committed. This includes money spent with Ohio suppliers; Intel reports it now has approximately 150 Ohio based suppliers working on the project.
While construction continues at the facilities, Intel is also moving forward with design and engineering plans for its office building, water treatment and reclamation facility, and an air separation unit on site in New Albany.
How to Get Involved
Business owners and local workers should keep an eye out for additional supplier opportunities and employment opportunities as the project progresses. Intel currently takes supplier intake forms online, and posts jobs through their website as well.
Outside of Intel, those interested in being involved in the project can look for additional growth happening within New Albany. New Albany announced plans to drastically increase its infrastructure to support the new workers at Intel, and representatives from the City state the delay in operation does not alter its timeline for growth over the next three to five years.
For clarity regarding the subject matter of this article, please contact KJK attorneys Emily Stoerkel (ELS@kjk.com) or Samir Dahman (SBD@kjk.com).