Ohio lures Intel's chip plant with $2bn incentive package

The $20bn chipmaking factory will help address global shortage

Intel chief executive Patrick Gelsinger, left, talks with Ohio governor Mike DeWine during the announcement on January 21, 2022, in Newark, Ohio. AP

Ohio offered Intel incentives worth about $2 billion to secure a new $20bn chipmaking factory that the company says will help alleviate a global shortage and create a new technology hub in the Midwest.

The state’s development director said on Friday that the combination of tax breaks and incentives are likely the largest ever offered by Ohio for what state leaders say is the biggest largest economic development deal in its history.

Santa Clara, California-based Intel, the world’s second biggest chipmaker, announced a week ago it had selected a site outside Columbus for two new chip-manufacturing facilities.

The complex could grow much larger and more quickly, Intel executives said, if Congress approves a $52bn bill that would invest in the chip sector and help ensure more production in the US.

Intel chief executive Patrick Gelsinger said the total Ohio investment could top $100bn over the decade, with six additional factories, making it one of the world’s biggest chipmaking sites.

Shortages of computer chips, which are mostly made in Asia and used in everything from hand-held video games to cars, have become a growing concern during the pandemic.

The US share of the worldwide chip-manufacturing market has declined from 37 per cent in 1990 to 12 per cent today, the Semiconductor Industry Association reported.

Intel wants to move quickly on the Ohio plants, which will support its own line of processors and build chips designed by other firms. Construction is expected to begin this year, with the sites coming online at the end of 2025.

Ohio’s offer includes $600 million to help Intel offset the cost of building the factories, which is more expensive than it would be in Asia, said Lydia Mihalik, the state’s development director.

The state also will pay about $700m for roadwork and water infrastructure upgrades, including a system that will allow the plant to reuse wastewater.

The state legislature this summer approved a 30-year tax break that will allow Intel to save $650m.

The state’s share will be money well spent because the Intel facility will not only create jobs, but also make Ohio more attractive to industries such as auto, aviation and defence that rely on chips, Ms Mihalik said.

“These investments will not only ensure that this project is successful here, but will also be supporting the region by increasing local infrastructure to support future growth,” Ms Mihalik said.

In addition, the state’s privatised economic development office, JobsOhio, will provide Intel with as much as $150m in combined economic development and workforce grants, said Matt Englehart, a JobsOhio representative.

The two factories on a 1,000-acre site in Licking County, to the east of Columbus, are expected to create 3,000 company jobs — many of them highly skilled — and 7,000 construction jobs. The site will support tens of thousands of additional jobs for suppliers and partners, Intel and local and state officials said last week.

Ohio beat out 40 other states for the project, state officials said.