There has been a lot of talk recently about building new semiconductor chip factories in the United States. Semiconductor chips power everything from smartphones to cars to advanced weapons systems, and there is currently a global chip shortage. This has led policymakers to call for increasing domestic chip production capabilities. But is a new chip mega-factory actually being built in the US? Let’s take a closer look at the facts.
The Chip Shortage
Demand for semiconductor chips surged in 2020 and 2021 as the Covid-19 pandemic drove increased sales of electronics like personal computers, gaming systems, and network equipment for remote work and learning. At the same time, chip fabrication plants shut down for periods due to the pandemic. This perfect storm of spiking demand and reduced supply created a global shortage of chips.
The shortage impacted industries across the board – automakers had to cut production because they couldn’t get enough chips, Apple delayed production of some new iPhone models, and even defense contractors were affected. Having so much of the world’s chip manufacturing concentrated in Asia, especially Taiwan, highlighted the risks of reliance on foreign sources.
Calls for US Chip Manufacturing
In response to the shortages and national security concerns, there were widespread calls to increase US chip fabrication capabilities. The CHIPS for America Act was passed in January 2022, providing $52 billion in subsidies and tax credits to boost US semiconductor research, design, and manufacturing. This was followed by the CHIPS and Science Act passed in August 2022, which provides nearly $53 billion to support US chip manufacturing, plus over $200 billion for scientific research.
These laws were intended to incentivize companies to build new chip fabrication plants (or “fabs”) in the US. Global giants like Intel, Samsung, and TSMC have existing chip fabs in the US but there was desire for new, cutting-edge mega-fabs to be located domestically. Having a robust chip manufacturing base in the US would help avoid future shortages and protect national security interests.
Intel’s New Chip Factories
In response to the government subsidies and desire to reshore chip production, Intel announced major plans in 2022 to build two new chip factories in central Ohio. Dubbed the largest semiconductor manufacturing location on the planet, Intel said the Ohio site could grow to house up to eight fabs.
The initial $20 billion investment will span 1,000 acres and create 3,000 direct Intel jobs with an average salary of $135,000, plus 7,000 construction jobs and tens of thousands of indirect jobs. The first two fabs are scheduled to come online in 2025. The manufacturing site could become a “chipmaking powerhouse in the Midwest” according to Patrick Gelsinger, Intel’s CEO.
Details on the Planned Ohio Chip Factories
Here are some key details on Intel’s planned chip mega-factory in Ohio:
| Location | New Albany, Ohio (near Columbus) |
| Total Investment | $20 billion initial phase |
| Jobs Created | 3,000 direct Intel jobs 7,000 construction jobs 30,000 indirect jobs |
| Production Timeline | Chips by 2025 |
| Chip Types | Angstrom-era chips |
| Fab Design | Two fabs in initial phase Potential for up to 8 total fabs |
| Fab Size | 1,000 acres total site |
These new fabs will produce Angstrom-era chips, which are the smallest and most advanced chips, critical for leading-edge computing capabilities. Having this production come online in the US will be a huge boost for domestic chip manufacturing.
TSMC’s Arizona Chip Plant
In addition to Intel, TSMC is also building a new chip fabrication facility in Arizona. Announced in 2020 and under construction since 2021, TSMC’s $12 billion fab is scheduled to begin high-volume chip manufacturing in 2024. While smaller than Intel’s Ohio campus, it represents another huge investment in US semiconductor production.
Some key facts on TSMC’s Arizona chip fab:
| Location | Phoenix, Arizona |
| Investment | $12 billion |
| Jobs Created | 1,600 direct high-tech jobs |
| Production Timeline | Chips by 2024 |
| Production Volume | 20,000 wafers/month at full capacity |
| Fab Size | 1,100 acres |
The TSMC facility will fabricate 5-nanometer chips, joining their existing wafer fab in Washington state as TSMC’s US manufacturing operations. This Arizona fab will represent the largest foreign direct investment to date in Arizona.
Samsung’s Potential Texas Chip Plant
Samsung is another semiconductor giant considering a major US chip factory. While plans are not finalized like the Intel and TSMC fabs, Samsung has filed documents with Texas state officials about a potential fabrication site in Taylor, Texas.
Initially, Samsung was seeking over $1 billion in tax incentives from Texas to support this $17 billion chip fabrication project. However, Samsung has paused its application for the tax breaks while the global economic outlook remains uncertain. The Taylor site could eventually house 8 factories to produce advanced logic and memory chips.
Samsung’s Possible Texas Chip Mega-Factory
Here are the unfinalized details on a potential Samsung chip fabrication complex in Taylor, TX:
| Location | Taylor, Texas (outside Austin) |
| Investment | Estimated $17 billion |
| Jobs Created | 1,800 initial jobs projected |
| Tax Incentives | Samsung sought over $1B in tax breaks from Texas |
| Potential Production Timeline | 2025-2027 (unfinalized) |
| Fab Design | Potential for up to 8 fabs |
While the Samsung fab plans remain tentative for now, the potential for another huge chipmaking site in Texas echoes the investments being made by Intel and TSMC. Having major wafer fabrication plants across the US would greatly boost domestic chip output.
Challenges Facing US Chip Production
Although Intel, TSMC and possibly Samsung are all constructing new chip factories in the US, there are still challenges facing American semiconductor manufacturing. Some key difficulties include:
– The new US fabs will take years to come online – providing no immediate relief to the current chip shortage. Ramping production will be gradual.
– Significant costs and lead times are required to build chipmaking facilities – Intel’s Ohio campus will take 3-4 years just to complete its first two fabs.
– Competition for engineers is intense – there simply are not enough semiconductor personnel to staff all these new labs and fabs. Attracting talent will be crucial.
– Most semiconductor manufacturing equipment comes from abroad – the US lags in producing the machines needed to actually make chips.
– Intense competition from established Asian chip manufacturers like TSMC and Samsung. High costs could make it hard for US sites to compete on volume.
Conclusion
In summary, while major new chip fabrication plants are indeed being constructed by Intel, TSMC, and potentially Samsung, it will take years for significant US chip manufacturing capacity to come online. These planned semiconductor mega-factories represent a strategic attempt to re-shore domestic chip production. But it remains challenging to compete with the massive scale and expertise of Asian chip fabrication leaders who have been perfecting manufacturing for decades.
Despite the current small scale of US chip production, these new generation mega-fabs represent hope for a stronger American semiconductor supply chain in the future. If even one or two of these ambitious fab projects come to full fruition, it would greatly boost domestic chip output and reduce reliance on foreign semiconductor manufacturing.