Intel Delays New Ohio Fab: Slow PC Market, Lack of CHIPS Act Funds

It's hard to believe, but it's been two years since Intel announced its plans to build a new fab in Ohio. The move by the company was going to create an all-new "Silicon Heartland" in the middle of the country and was part of an aggressive expansion plan by Intel. That plan has now run into some unexpected turbulence, as Intel has officially delayed the fab's opening by a year, pushing it to 2026. It cites an unexpected downturn in the PC market and a lack of funding from the CHIPS Act as the reasons for the delay.

The Wall Street Journal was the first to report big trouble in little Ohio for Intel. The report says the company has run into unexpected challenges, which include market challenges and the surprisingly slow rollout of CHIPS Act funds, upon which Intel was relying to kickstart its $20 billion Ohio project. The downturn in the PC market has affected many PC companies as the world recovers from its pandemic-based spending spree, but the market is expected to rebound in 2024. Still, the future is uncertain for Intel at this exact moment, as it recently projected first-quarter 2024 earnings below estimates.

The site where Intel is building its new facilities, before construction began. Credit: Intel

Funds from the CHIPS Act have also yet to materialize despite the bill being signed into law in August of 2022. The government initially approved $52 billion in funds to juice US semiconductor production, but so far, it has only delivered a paltry $35 million to an obscure defense contractor. Intel hoped to have a few billion wired to its checking account by now to pour that money into the Ohio fab, but that has not happened. TSMC is reportedly waiting for funds for its Arizona expansion plans and has announced its own delays but for reasons different from Intel's.

Despite the delay, Intel has made progress on the Ohio facility. The journal reports Intel says it's put in more than 1.6 million hours of labor so far, with 800 people working on the site. It's also poured enough concrete to cover a football field with a five-foot slab. The company expects several thousand people to work on the site by the end of the year, fulfilling its original promise to bring thousands of jobs to Ohioans. The company was also given $2 billion in subsidies from the state of Ohio, but it remains to be seen if those funds are also MIA so far.

This is an unexpected setback for Intel, which was seen as making a bold strategic decision by announcing a fab in Ohio. However, those plans came at a time of uncertainty for the PC industry due to the pandemic, and that downturn has yet to reverse course fully. Also, this region of the country has never previously been part of the global semiconductor supply chain, as existing plants are all in the southwest. It was an aggressive move by Intel on all fronts and has now run head-on into reality, as well as the glacial pace of government subsidies.