View August drone footage from Intel’s Ohio One construction site in the video player above.
NEW ALBANY, Ohio (WCMH) — Intel’s foray into Ohio could be short-lived, with reports the tech giant is considering what to do with its computer chip manufacturing arm as part of cost-cutting.
Intel CEO Pat Gelsinger is considering additional steps for damage control to present to the publicly-traded company’s board in a mid-September meeting, Reuters reported. Intel previously announced it would lay off 15% of its global workforce, as well as suspend its stock dividends program, after reporting quarterly losses of $1.6 billion in a July earnings presentation.
Investors’ reaction came in the form of a swift nosedive, with Intel stock falling from a high of $50 per share in January to $19 in August. Investopedia reported Tuesday that Intel was also at risk of being delisted from the Dow Jones Industrial Average, after a 25-year stint among the collection of prominent U.S. stocks. As of Wednesday, Intel’s shares ranked as the worst performing of the group in 2024.
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A group of stockholders also launched a lawsuit against Intel in August, specifically over “false and misleading misrepresentations” about its foundry division, which the Ohio One plant is part of. Gelsinger’s presentation to the board doesn’t include Intel Foundry services as of Wednesday, with a source telling Reuters that the CEO instead wants to sell a unit called Altera. But Bloomberg reported he was considering adding a move to pump the brakes on expansion with new factories — also known as fabs — or a spin-off and sale of the foundry division altogether.
Reuters’ source, similarly, said Gelsinger could pitch halting the company’s construction of a $32 billion semiconductor fabrication plant in Germany. But with multiple government incentives wrapping around Ohio One, Intel’s options for next moves locally could see complicated repercussions.
If Intel Ohio One is canceled
The New Albany plant recently saw supply “super loads” delivered over the course of the summer. While that was indicative of Intel’s commitment to finishing “Silicon Heartland,” the company also confirmed it wouldn’t meet a target to be up and running by February 2025. Instead, Intel forecasted a time between 2027 and 2028. Farther back in 2022, Intel delayed the groundbreaking of the Ohio plant as it waited for Congress to pass the CHIPS Act and net federal funding for the project.
Ohio One’s German counterpart — which outlets have named as potentially on the chopping block — was the recent recipient of a similar pattern. Volksstimme reported Intel pushed back the start of construction on the Magdeburg plant to May 2025, the second delay since it was supposed to start in early 2023. German officials recently rejected Intel’s request for more money, and existing government funding to the tune of 6.8 billion euros hasn’t phased Gelsinger from reportedly considering the plant for cancellation altogether.
It wouldn’t be the first stoppage in 2024. Calcalist reported in June that Intel had halted its plans for a $25 billion semiconductor fabrication plant in Israel, and the company sent notices to suppliers in the area that their contracts were canceled. The country had promised $3.2 billion in incentives for the development.
If Gelsinger were to decide to completely halt the Ohio One project, Intel would be on the hook for not just CHIPS Act funding, but millions in incentives from the state as well. Both packages included clawback measures, which would give both levels of government the ability to recover awarded funds. President Joe Biden confirmed in March that Intel had racked up $8.5 billion in CHIPS funding, alongside eligibility for $11 billion in loans.
The Ohio Department of Development’s agreement with Intel included $600 million in grants for Intel to build two manufacturing facilities, and have them operational with 3,000 employees by the end of 2028. Intel was required to provide detailed accounting of how it spends the grant money, plus annual performance reports beginning in March 2024.
The parties agreed Ohio could stop payments to Intel and claw back what it already gave if the company did not hold up its end of the bargain. But another $691 million was earmarked for infrastructure investment like a new water reclamation facility for the New Albany plant. This portion would have its own clawback mechanism in a separate agreement, but would leave structures standing for naught with a canceled project.
A new owner steps forward
Gelsinger is reportedly considering selling off the Intel Foundry altogether, but the idea hasn’t made its way into the presentation as of Wednesday. Multiple outlets have named Taiwan Semiconductor Manufacturing Co. as a possible suitor, though sources haven’t said anything to indicate the company is in talks with Intel. TSMC is considered a superpower among semiconductor manufacturers, outpacing both Intel and Samsung’s factories in revenue as it pumps out chips for clients like Nvidia and Apple.
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Gelsinger could also spin off the foundry into a subsidiary of Intel, potentially with its own executive structure. The company previously employed a similar division after it bought antivirus firm McAfee in 2011, later letting it operate with its own CEO while Intel jointly owned it with private equity firm TPG. Pooling resources with another company on the foundry could give it additional fuel to burn while the new Ohio fab finishes construction.
However, Intel and TPG ultimately let go of McAfee, and the Advent International investment group acquired it in 2021. Similarly, a joint venture on the foundry could simply postpone an eventual buyout.
Ohio One presses on
Together with President Joe Biden, Gelsinger broke ground on Ohio One just over two years ago. While the plant is no longer running on the same timeline from back then, the company still has incentive to finish the job, with billions of dollars on the line for it. Calcalist also shared a promising hint: when Intel halted construction in Israel, the outlet reported several senior officials transferred their jobs to the Ohio factory.
Intel had plenty of openings specifically intended for its New Albany plant in 2022. But as of Wednesday, the company’s career page no longer listed any jobs earmarked for Ohio. Bechtel, the contractor Intel chose for its first phase of construction, still had seven positions for hire listed for the area.
Avoiding the clawback measures from Ohio, at minimum, will require Intel to have 3,000 workers on-site at operational fabs by 2028. And the company already has boots on the ground in New Albany, including factory general manager Jim Evers, who envisioned it as the biggest manufacturing operation in Intel’s fold.
Gelsinger coined the phrase “Silicon Heartland” to endearingly describe what the Ohio One project could bring to the state. He’s not alone in thinking about what it could do to the Columbus metro. Earlier in 2024, the Mid-Ohio Regional Planning Commission projected that central Ohio’s population will exceed 3 million by 2050, partially crediting Intel’s project that could “produce jobs in a variety of pay ranges, and support an increasingly diversified talent pool.”
To keep that momentum going, Gelsinger has to keep his word.
“The Rust Belt, it is dead,” Gelsinger said at the plant’s groundbreaking. “The Silicon Heartland begins.”
