Intel announced plans on Friday to invest over $28 billion to construct two new chip factories in Ohio, a strategic move aimed at expanding its contract manufacturing business and enhancing its competitiveness with global leader Taiwan Semiconductor Manufacturing Co. (TSMC).
Following the announcement, Intel’s shares rose nearly 2% in early trading, offering a slight reprieve to a stock that has fallen over 55% this year. The investment represents a significant step in CEO Pat Gelsinger’s turnaround strategy as the company, once dominant in the chipmaking industry, works to regain technological ground lost to TSMC, the world’s largest contract chipmaker.
The Ohio project comes shortly after Intel’s multibillion-dollar deal with Amazon, in which Intel will provide custom AI chips for Amazon Web Services (AWS), the e-commerce leader’s cloud services division. The Amazon agreement was widely seen as a vote of confidence in Intel’s foundry business, which has faced financial challenges.
Intel, headquartered in Santa Clara, California, expects the initial construction phase of the Ohio facilities to create around 3,000 new jobs with Intel. These facilities are part of Gelsinger’s vision to transform Intel into a key player in the contract manufacturing sector, a market long dominated by TSMC.
The announcement follows a turbulent year for Intel, which included a suspended dividend, workforce cuts, and the abrupt resignation of a high-profile board member. The substantial decline in Intel’s stock price also sparked concerns about its continued presence in the Dow Jones Industrial Average. However, this ambitious investment in U.S.-based manufacturing reflects Intel’s commitment to long-term growth and increased self-sufficiency in semiconductor production amidst global supply chain shifts.
