As Intel Announces its Ohio Chip Fab, an Industrial Policy Debate Looms

By Matthew McMullan
Jan 24 2022 |
Coming soon to the Columbus, Ohio area: A semiconductor chip fabrication plant! | Getty Images

Competing bills will clash in Washington. Can the House and Senate reach agreement?

The last time I was in Columbus, Ohio, I bought a very good book at a very cool bookstore and ran in the annual Columbus marathon. And lemme tell you, brother, I came in a lot closer to last place than I did to first! I am not a fast runner.

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Still, you see a lot of neat stuff running around Columbus very slowly. The winding Scioto River, the pleasant German Village neighborhood, the big ol’ horseshoe football stadium on the grounds of the Ohio State University. It’s a Central Ohio feast for the eyes.

But! if you were to go back in, say, three to five years – and the race organizers were to drastically alter the course map so that you instead ran 15 miles out of the city center to nearby New Albany – you might run by something not often seen in the United States these days: A new semiconductor chip fabrication plant under construction. A new Intel chip fab, where Intel will make chips not only for its own products but that it will sell to others, is coming to Ohio. It will employ at least 3,000 people making the tiny little computer chips required to make virtually every electronic gadget we use go, and it will cost $20 billion to build it.

This isn’t the only such factory in the United States. There are fabs in North Carolina, Idaho, and Oregon, among other locations. And there are other new fabs being built right now in Arizona and Texas. But this fab will be the first in the state of Ohio, and supply chains will have to shift toward it to supply this huge new plant, which means even more economic activity for the Columbus area. It takes incredibly expensive machinery, as this CNET article explains, to build these increasingly small and complex chips.

After the new fab was first reported last week by Time, The Intel CEO was in Washington where he and President Biden pressed House and Senate lawmakers to convene and pass industrial policy legislation – meant to bolster America’s competitive footing against the Chinese economy – that would pump hundreds of billions of dollars into chip production, as well as artificial intelligence research, quantum computing, and other next-generation technologies.

Where does AAM stand?

The Senate already passed its version of this bill last year, and it had some good ideas in it. Still, it needs improvement on key areas like trade enforcement so that this significant amount of money doesn’t end up funding foreign state-owned enterprises and subsidiaries.

For example, a very good ideaput forward by Ohio senators Rob Portman (R) and Sherrod Brown (D) – would tighten trade remedy rules so that imports couldn’t be routed through third-party countries to avoid U.S. tariffs. It didn’t make it into the final Senate bill, but there’s corresponding legislation in the House that could make it into that chamber’s version. The Alliance for American Manufacturing (AAM) hopes it does!

The House version, which is expected very soon, is also rumored to include funding for supply chain resiliency that focuses on reshoring. That’s a good idea, and should have clearly defined rules – namely that the loans, guarantees, and grants it doles out go toward strengthening domestic industrial capacity. AAM made the case for this kind of resiliency back in October when we offered testimony to a House Energy & Commerce subcommittee.  

It’s also expected to include a proposal to zap the de minimis threshold that basically allows e-commerce giants to avoid paying import duties. AAM is on board with this proposal as well. Really, it’s okay; Bezos can afford it.

In the meantime? We’ll be watching as the Intel fab project in Ohio moves forward, and we’ll be keeping an eye on the industrial policy debate on Capitol Hill. Stay tuned!