Intel Corporation INTC has postponed its $20 billion chip-manufacturing project in Ohio due to market difficulties and slow government funding.
What Happened: While the initial timeline for chip-making was set for next year, construction completion is now expected by late 2026, reported the Wall Street Journal, citing people involved in the project. The commencement of chip production will follow the installation of complex machinery required for advanced semiconductors.
“While we will not meet the aggressive 2025 production goal that we anticipated when we first announced the selection of Ohio in January, 2022, construction has been underway since breaking ground in late 2022 and we have not made any recent changes to our pace of construction or anticipated timelines,” an Intel spokesperson told Benzinga.
The company originally targeted production in 2025, but the timeline was contingent on government funding.
“We remain fully committed to the project and are continuing to make progress on the construction of the factory and supporting facilities this year. As we said in our January 2022 site-selection announcement, the scope and pace of Intel's expansion in Ohio may depend on various conditions,” the spokesperson added.
intel’s Ohio project, one of the largest in the country, is part of the Biden administration’s push to expand domestic operations and reduce reliance on Asian factories. The Chips Act, passed two years ago, outlined $53 billion of incentives for the domestic industry, including substantial grants for projects like Intel’s. However, no significant grants have been awarded yet.
The project, which is expected to create 3,000 new factory jobs, received $600 million in grants from Ohio. Currently, around 800 people are working on the site, with the figure expected to rise to several thousand by year’s end.
Despite economic difficulties and a shift in market dynamics, Intel remains committed to the project. The company has already made significant progress, with more than 1.6 million work hours completed and enough concrete poured to cover a football field with a slab over five yards tall.
Why It Matters: Intel’s project aligns with the Biden administration’s $53 billion Chips Act, announced ahead of the elections, which aims to bring advanced microchip production back to the U.S. and counter China's rising chip industry.
However, the slow rollout of the Act, hindered by permissions, negotiations, and a shortage of workers, has led to only two minor grants being approved out of 170 applications. This slow progress may have been a contributing factor in Intel’s decision to postpone its project.
The delay also comes on the heels of Intel’s recent fourth-quarter earnings, where it reported a 10% year-over-year increase in revenue, beating Street consensus estimates. However, the company’s guidance disappointed investors, emphasizing the need for the successful execution of projects like the Ohio initiative.
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