Securing transformative investment is the holy grail for many economic developers. So when Intel sought a site for its plans to build the world’s largest chipmaking facility on US soil, Ohio state officials kicked into action.
“The minute I learned that we had an actual chance of winning this project, I thought, this is perfect for us,” Ohio’s lieutenant governor John Husted tells fDi. “This is an important foundational facility for all that we do in Ohio in terms of high-tech manufacturing.”
In January 2022, Intel announced it would invest at least $20bn in the first phase of a chipmaking complex to the east of Ohio’s capital Columbus. It is the largest announced investment in the Midwestern state’s history, according to fDi Markets.
“The project serves as a magnet that will attract investment to Ohio and then ripple across the state in terms of economic value,” says Mr Husted. Some 140 companies already operating in Ohio are contractors to Intel.
Mr Husted says that at least 25 other businesses are also planning to set up operations close to Intel to supply their chip factories, known as fabs, with everything from chemicals to materials. Intel’s project is “perfect” for Ohio, says Mr Husted, as the state aims to attract the talent and innovation needed to transition to high-tech manufacturing.
The need for incentives
Economic developers in Ohio first made contact with Intel in May 2021. Mr Husted notes that the process “happened pretty quickly”, particularly given the distinct requirements for a project of this magnitude.
“[Intel] had really difficult specifications for a site because they needed a large amount of land, near a workforce, with a lot of specifics that were important to the site,” he says, adding that this “narrowed the opportunity”.
“We only had one site in Ohio that we could pull together that quickly,” he says. By June 2021, Intel confirmed that the site met their requirements. Months of long conversations followed, says Mr Husted, with the aim of building trust between the chipmaker and officials from the local and state government.
The state of Ohio has offered $1.29bn of cash incentives to Intel, including $600m to offset the costs of constructing two fabs and a further $691m to help build roads and a water treatment plant.
Mr Husted defends the incentives as a “solid decision”, saying the infrastructure investment will “anchor the facility” in Ohio and enable the whole supply chain to be built around it.
“We were competing with a lot of places,” he says, highlighting that Intel had narrowed down their search to eight US states, which could all offer the same kinds of incentives.
Bigger than Ohio
Mr Husted says that Intel’s project is much “bigger than Ohio”, adding that this is about whether Western economies want to build semiconductors or continue to rely on Asian manufacturers.
“We really want to create the national and economic security that comes with reshoring an industry in which America once made 37% of chips, but now makes just 12% of them,” he says. “Global political instability and the pandemic really awoke many people to the fact that we can’t just build things in other places, and then import them here and assemble them.”
Intel has said that it could invest up to $100bn into its site in Ohio if the Chips Act is passed by Congress. This would bring $52bn of federal investment into semiconductors, in which Mr Huston says would “level the playing field” with incentives from Asian governments.
Although the first phase of Intel’s project will go ahead regardless, Mr Huston says the speed of growth at the site will depend on the Chips Act being passed.
This article first appeared in the April/May 2022 print edition of fDi Intelligence. View a digital edition of the magazine here.