Intel CEO: Development of 'Silicon Heartland' comes as chip shortage changes industry mindset
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Intel CEO Patrick Gelsinger said Friday that a $20B project to build a manufacturing facility in Ohio will contribute to a "Silicon Heartland" to go with Silicon Valley.
In an interview with CNBC, the chief executive of Intel (NASDAQ:INTC) added that the development of new capacity was needed to combat the supply shortages that have bedeviled the semiconductor sector lately. He also noted that a change in mindset has convinced leaders in the industry to build out manufacturing capacity in the U.S.

"We need this capacity -- period. ... We believe that there is simply so much demand for our products," he said of the new project.
In an initiative announced early Friday, Intel (INTC) said it would invest at least $20B to build at least two semiconductor fabrication plants on a 1,000-acre site near Columbus, Ohio. Development of the facility is expected to start this year, with initial operation targeted for 2025.
Gelsinger reported that the company looked at 30-40 sites around the U.S. before landing on the Ohio location. He said the firm considered such factors as energy, water and the availability of talent before making a final selection.
Saying the plant will produce products for the global market, Gelsinger noted that advancements in automation have diminished the importance of labor costs for the manufacturing process. This would make it more economically viable to build a fab location in the U.S., he said.
However, Gelsinger still called on government support to make it possible for Intel (INTC) to compete on a global market.
While the economic concerns played a part, the Intel CEO noted that considerations of supply chain and national security also contributed to the decision to build a location in the U.S.
"Clearly, the crisis that we have been in has caused a rethinking of a cost-only mindset versus a resilience and flexibility mindset," he said.
Turning specifically to China, Gelsinger characterized U.S.-China relations are "very tenuous" but suggested that healthy trade relations could lower the geopolitical temperature.
"The more we increase the presence of Intel and U.S. products in China or anywhere else in the world, that's good policy. That's good trade," he said.
Following the fab announcement, INTC rose about 1% in Friday's early intraday trading, climbing 52 cents to $52.56 at about 9:45 a.m. ET.
INTC rallied to a 52-week high of $68.49 last April but suffered intermittent selling pressure from there. This included a massive sell-off following its last earnings report in October, when a disappointing outlook sparked a major retreat.
Intel (INTC) is scheduled to announce its next earnings report next week.
With its weakness over the second half of 2021, INTC has fallen well behind its competitors in the semiconductor space. The stock has fallen about 11% over the past year, compared to an 18% rise in the S&P 500.
Over the same time, NVIDIA (NASDAQ:NVDA) and AMD (NASDAQ:AMD) have shown advances of 81% and 37%, respectively, as you can see from this chart.