NEW ALBANY, Ohio (WCMH) — Intel announced it will need to get external customers for its manufacturing division, or it may need to stop all work in Ohio.
Last week, Intel announced it is further slowing construction at its $28 billion manufacturing site in Licking County. Intel also said if it is unable to find external customers for a new manufacturing technology, it will likely have to stop all work in Ohio. The technology is called 14A and won’t debut until 2027, so Intel will have some time to try and acquire the customers it needs. See previous coverage of Intel’s slowed construction in the video player above.
Why is 14A such a big deal to Ohio?
To understand 14A’s importance, it’s crucial to first understand how Intel works. Intel is largely split into two divisions: Intel Products and Intel Foundry. Products is in charge of inventing and marketing physical goods, and Foundry is in charge of manufacturing those goods. Intel largely looks at them as two separate companies that both play a role in making semiconductors.
Semiconductors are small, about the size of your fingernail, and incredibly difficult to manufacture. Intel Foundry is tasked with figuring out the best methods, called process nodes, of making them. Nodes are like recipes that detail thousands of steps and precise ingredients that Intel will use to manufacture a semiconductor chip.
Nodes are evaluated based on power, performance and how much area is needed for silicon. The best node will use less power and area while maximizing performance at a low cost. 14A is Intel’s newest node and is still in development, but the company has high hopes for it.
Intel Foundry makes its money by marketing these “recipes” to customers. Foundry’s largest customer is Intel Products, but the company said it will need other customers if it is going to keep the Foundry business afloat. In its Q2 fiscal results, Intel was honest that it would likely have to stop all operations in Ohio if it could not secure external customers for 14A.
Will Intel be able to get those customers?
Intel CEO Lip-Bu Tan is hopeful the company will secure external 14A customers, but it will require a lot of trust. So far, the company has been largely unsuccessful in attracting outside clients, and even Intel Products sometimes uses external manufacturers rather than Intel Foundry. Although Intel sees Products and Foundry as different entities, it’s hard to convince other companies to feel the same.
Intel Products is a direct competitor to all of the companies that Intel Foundry hopes to contract with. From the outside, it’s easy for other companies to just see Intel, the name of their competition, and turn elsewhere for manufacturing. Other customers could worry Intel won’t prioritize their business over internal manufacturing, or have difficulty trusting an apparent competitor with their product secrets.
Tan plans to fix this by emphasizing trust and learning from what did not work with the process nodes Intel already has. He said the company’s history as a leader in the tech industry allows them to still be competitive as a manufacturing business. Since taking on the role of CEO in March, Tan has met with dozens of Intel customers to hear what the company can do better.
Intel representatives told NBC4 they are still committed to the Ohio One plant. Intel is already scaling down Foundry operations, including slowing construction in Ohio, as Tan realigns the Foundry to be reactive to market needs instead of proactive. Tan said Intel will only invest in Foundry expenses if there is a clear market for them going forward, including Ohio’s plant.
What if Intel can’t get the customers?
Without external 14A customers, Intel said it will “likely” stop all Ohio operations as part of a larger deconstruction of the Foundry. This decision would be expensive; Intel said there are only two other semiconductor manufacturing companies that could develop the products they need, and relying on third parties would be pricy.
Getting out of the promises made in Ohio and other states would be even more expensive. Intel estimated it has invested over $100 billion in property and equipment at its Foundry sites that it could lose out on. It would also likely have to pay Ohio and the federal government back for monetary incentives it received to build semiconductor chips in New Albany, which could cost billions.
In November 2024, Intel signed an agreement with the U.S. Department of Commerce for an award of $7.9 billion, $1.5 billion of which was supposed to go to Ohio. The money came from the bipartisan CHIPS Act, which allocates funding to promote domestic semiconductor manufacturing.
Despite the agreement, Intel said it has not received CHIPS Act payments it has submitted for reimbursement. To date, Intel has received $2.2 billion, all of which appeared to be paid before President Donald Trump, a CHIPS Act critic, took office. Intel said between April and July, it submitted claims for $850 million of CHIPS Act funding, but has received none of it and is uncertain if it will come at all.
Intel stopped or combined nearly all of its other Foundry expansion projects in other countries, but has repeatedly affirmed its commitment to Ohio. With 14A unavailable for the next two years, it seems most likely Ohio’s construction will slowly continue until 14A’s future is made clear. Intel has not announced an updated timeline with slowed construction.
