Ohio has landed what could become the biggest semiconductor operation on Earth.
Chip giant Intel plans to officially announce Friday that it will invest $20 billion to build two computer chip plants in Jersey Township in Licking County in what will be Ohio’s largest economic development project to date. State and local officials are set to gather in Newark this afternoon to celebrate the news.
The factories, called fabs, will employ 3,000 workers at an average salary of $135,000 per year. On top of that, the project is expected to create 7,000 construction jobs and 10,000 indirect jobs. And that’s just the start.
Even bigger is what the project promises to bring with it: new clout for Ohio as a dominant player when it comes to economic development.
Jersey Township chip plant:How does the Intel semiconductor plant compare to other manufacturing projects in Ohio?
The project, which will be Intel’s first new manufacturing site in 40 years, eventually could involve eight factories and $100 billion in investment over the next decade including Intel and its suppliers and partners. Construction is expected to start this year, with the first chips being produced by 2025.
“Ultimately, we hope to establish the largest semiconductor manufacturing site on the planet,’’ Intel CEO Pat Gelsinger and Senior Vice President Keyvan Esfarjani told Gov. Mike DeWine and Lt. Gov. Jon Husted in a letter that was delivered to the two on Christmas Day.
“We have felt your enthusiasm strong commitment to not only help Intel grow in your state, but to help advance semiconductor research and development and manufacturing in the United States. This project is a long-term strategic investment that will help drive our industry to Ohio,” the letter says.
“That gave us a really awesome Christmas present,” said DeWine, who with Husted laid out in a series of interviews with The Dispatch how Intel ended up choosing Ohio for the project.
Intel and Ohio:What we know about Intel factory coming to Columbus area
DeWine said the project is to this generation of Ohioans what Honda was to those in the 1980s.
“It has so many ramifications that you can’t quantify them,” DeWine said. “If you’re a CEO, you’re going to say, ‘Why are they going to Ohio? I better check them out.’
The plants will be built on 1,776 of the 3,190 acres that New Albany is annexing from Jersey Township in Licking County.
Intel will use 926 acres and has an option to take that up 1,500 acres, DeWine said. Another 250 acres will be set aside for suppliers.
About 30 companies that supply Intel are expected to set up shop at the site, creating even more jobs. There are about 140 companies in Ohio that currently supply Intel.
Those companies include four that announced their intentions to establish a presence near Intel: Allentown, Pennsylvania-based Air Products, an industrial gas supplier; semiconductor materials firm Applied Materials based in Santa Clara, California; equipment supplier LAM Research of Fremont, California; and Ultra Clean Technology, which specializes in contamination control, from Bridgeton, New Jersey.
State and company officials have not yet disclosed what economic incentives are involved in the deal.
To support a workforce equipped to deliver what the company and its suppliers will need, Intel also is committing $100 million to partnerships with local educational institutions including Ohio universities, community colleges and the U.S. National Science Foundation.
Semiconductors are “integral to a wide range of applications in which Ohio State is actively involved from a research perspective, including artificial intelligence, quantum computing, vaccine development and more. So, it’s a natural fit for Ohio State, along with our fellow institutions of higher education, to partner on this game-changing investment in semiconductor manufacturing,” said Kristina Johnson, president of Ohio State University, in a release
Chips are critical to the economy
The move by Intel is part of broader effort by the semiconductor industry to address the global shortage of computer chips that has wreaked havoc during the pandemic.
Beyond fixing that shortage, Husted and DeWine said the plants are part of a much bigger global story about bringing back manufacturing to America of critical products necessary to power the nation’s economy and its military.
“I’m very proud Ohio is going to be part of the solution to this problem. We must make chips in the United States, and there is no better place than making them in Ohio,” DeWine said.
“This is a huge signal to the country and the world about what’s going on in Ohio today. We remain a manufacturing state. Manufacturing is a major part of our future.”
“There’s great reputational value for both of us,” Husted said. “They’re trying to do something that is unprecedented in the time, the scope and speed in which they’re trying to accomplish this. If we help them do that reputationally, we benefit because they’re successful and we show ourselves as a state that can do big things.”
Chips are an integrated circuit or small wafer of semiconductor material embedded with integrated circuitry.
They are the brains behind thousands of products, including cars, appliances, cell phones, gaming consoles, medical equipment and toys, along with the military equipment.
Currently, 12% of the world’s chips are made in the U.S., down from 37% in the 1990s. About 80% are made in Asia where governments have invested aggressively in chip manufacturing while the U.S. has not, according to the Semiconductor Industry Association.
Intel has previously announced plans to build two more factories in Arizona, and Gelsinger has talked of additional investments that include creating a mini-city that could cost up to $100 billion with 10,000 workers and thousands more workers from suppliers.
Semiconductor companies have started the long process of developing new U.S. sources of chips. Even as Intel has pledged to move quickly, the process figures to take several years before the plants would be up and running.
Though Ohio has a long history as an industrial power, these will be first chip plants to be built in Ohio and maybe the Midwest.
“This is a brand new industry for us in Ohio,” Husted said. “Semiconductors aren’t made here. We have no competency in this area.”
Intel reached out to Ohio regarding semiconductor factory
Intel initiated contact with JobsOhio, the state’s economic development arm, on May 3, 2021, indicating it was looking for possible sites for a factory and giving the state some parameters of what it wanted. JobsOhio, without identifying Intel as the business it was working with, reached out to its regional partners, telling them they had three days to identify a location.
One Columbus responded with the Jersey Township site, which is mainly farmland, including the site of Heimerl Farms, a pork producer.
There wasn’t anything particularly special about the site.
“It was a site that could be assembled quickly,” DeWine said. “It was a lot of land, and they wanted to have the assurance that they could grow if they needed to grow.”
The second factor that drew Intel was the proximity to local community colleges and universities, he said. Finally, there was the availability and cost of water and other utilities.
Intel told the state in June that the site met its demands, but that the state remained a long shot to land the project.
That began the process of Ohio convincing Intel that the state was capable of providing the workforce and infrastructure necessary for the project, and that Ohio could do so quickly.
Intel had other requirements, too: The plants will need 5 million gallons of water a day, and the company is committed by 2030 to recycling all the water the plants use use along with powering the operations with 100% renewable energy. It also wants to have zero landfill waste and reduce its carbon dioxide footprint.
At this point, the state began to pull in cabinet leaders from transportation, development, environment and education, and it turned to the cities of Columbus and New Albany along with Licking County and Jersey Township officials as negotiations with Intel intensified.
DeWine said the state will have to expand route 161, and surface roads in the area will have to be improved.
“They have to trust us that we are going to carry out what we say we’ll carry out, and that we have the ability to do that,” DeWine said.
A key factor was the move by state legislators to add incentives for “megaproject” operators and suppliers into the state budget passed in July.
The operator credits are available to companies that invest at least $1 billion in the state or create an annual payroll of at least $75 million. In return, they get job creation tax credits for 30 years instead of the usual 15 years.
Qualifying suppliers get to exclude their sales of tangible property to megaproject operators from their total receipts. That’s important because Ohio’s commercial activity tax is based on gross sales, not gross profits.
“Until that passed, we weren’t in the game,” Husted said. “It was essential to even competing.”
Federal incentives pending for chip factories
The first phase of the project is not dependent on Congress passing legislation that provides incentives for chipmakers to bring production back to the U.S.
Last June, the Senate passed the United States Innovation and Competition Act that includes $52 billion in funding for semiconductor research, design and manufacturing provisions, but the House has yet to pass the bill.
Industry studies have found that the funding can support 19 major semiconductor facilities, 10 more than what would be built without such incentives.
The funding would create an an average of 185,000 temporary jobs and add $24.6 billion to the economy annually, according to the study. Ultimately, the funding would add 280,000 permanent jobs to the economy beyond 2026, including 42,000 jobs in the semiconductor industry.
DeWine said passing the legislation would help Intel move more quickly. The state has been lobbying Ohio’s congressional delegation to get the legislation passed.
“This is a global competition,” Husted said. “This is about the economic future, the national security of the country and whether America will produce this important product in everything we use.”
Winning the project shows that Ohio, which lost jobs for years as some manufacturing moved overseas, has shed its image as a Rust Belt state, Husted said.
The workers are expected to bring credentials from universities, community colleges and high school career programs. The state also figures to be a draw for workers from out of state.
In the last two years, DeWine said 30 companies have moved operations to Ohio with a total investment of $545 million.
By contrast, this move by Intel is $20 billion, with potentially tens of billions of dollars more in future investments.
“This generation of Ohio children is not going to have to leave Ohio to find the best high-tech jobs in the world because they are right here, in our state,” Husted said. “This has such meaning for families and children and the economy of our state. The future is here with this project.
“When we started to really believe Intel was serious about Ohio, this team worked day and night. Every time they had a question they threw up, an obstacle, we were not going to give up on winning this because we knew what it meant for our future. The fact they picked Ohio is literally one of the most exciting moments I’ve had in public service.’’
Dispatch Reporter Anna Staver contributed to this report.