COLUMBUS, OH: On 9 September President Joe Biden and a host of dignitaries broke ground on a $20 billion semiconductor plant that will employ 3 000 workers on a 1 000-acre site just outside Columbus. Intel hopes the fabrication (fab) plant “will be a new epicenter for advanced chipmaking in the Midwest.” 

Intel’s vision of its Ohio fab becoming a global leader in semiconductors is a gamble. If successful it will be transformative, revitalizing a struggling region that 60-years ago led the world in motor vehicles. Conversely if Intel and Ohio come up short, expansion in Columbus won’t occur and the Midwest will have squandered a huge opportunity dashing Intel chairman Pat Gelsinger’s dream of Ohio becoming “the largest semiconductor manufacturing location on the planet.”

Some local leaders recognize the magnitude of the challenge. Kristina Johnson, president of Ohio State University (OSU), has a resume that stretches from a PhD in electrical engineering from Stanford to an engineering deanship at Duke University to being undersecretary of energy under President Barack  Obama. Rebuffing sceptics who doubt Ohio will make the transition to micro circuitry, Johnson in April convened a workshop of 11 educational institutions to make sure Intel gets the educated work force it will require.

Asking: “How can we come together to ensure that Intel is successful?”, Johnson’s workshop led to the creation of a Midwest Semiconductor Network to co-ordinate efforts boosting science education and cranking out the best engineering graduates. The disparate institutions – all within a four-hour drive of Columbus – include the University of Michigan, Purdue, Notre Dame, Case Western in Cleveland, Michigan State, Dayton, and Cincinnati. More colleges are expected to join.

Incredible opportunity

In unveiling the network, Grace Wang, Ohio State’s research director, spoke of the incredible opportunity presented by Intel’s multi-billion-dollar investment. She emphasized cooperation, saying: “Only through collaboration can we truly realize the promise this opportunity affords us.” OSU president Johnson repeated the mantra that education is the key to success. “American innovation cannot stay ahead of the global race,” she said, “without investments in academia. And no single university can provide the research and academic backbone to support this rapidly advancing industry.” 

Intel chose Columbus for multiple reasons, foremost being its skilled work force, access to water, and large expanse of available flat land. Michael Hicks, a site selection economist at Indiana’s Ball State University, says Columbus won simply because of its educated workers. “The Columbus metro area,” he says, “is already rich with college graduates…and has the local environment to attract more.” Hicks calls Intel’s announcement “the most consequential manufacturing commitment in recent decades.” 

Outpacing in-state rivals Cincinnati and Cleveland, state capital Columbus has a growing population, up 15% since 2000 to 905 000. Columbus and nearby Indianapolis were finalists in the competition for Amazon’s second U.S. headquarters, a prize won in 2018 by northern Virginia, adjacent to Washington, DC. 

Tax breaks are equally important. Intel’s Ohio investment wouldn’t have happened without money from the CHIPS act, bi-partisan legislation approved by Congress in August allocating $39 billion for semiconductor manufacturing. In addition, Ohio is providing $700 million to improve infrastructure plus corporate tax breaks exceeding $1 billion.

Talent wins

Lou Glazer, president of the Michigan Future non-profit, says Michigan losing to Ohio is a wake-up call for his state that remains too heavily focused on the auto industry. Glazer says the lesson of Intel’s decision is that “the places with the greatest concentrations of talent win.” Because Michigan is a laggard in knowledge-based industry, he argues, employment in Michigan is down with wages that have declined to 91% of the national average compared to 109% in 1990. Glazer writes, “We now live in an economy where talent attracts capital. Where talent — particularly those with a four-year degree or more — is the asset that matters most and is in the shortest supply for high-growth/high-wage employers.”

The cautionary tale tempering the Intel euphoria is the sad experience of Wisconsin and Foxconn, Taiwan’s biggest contract manufacturer. In 2017 Foxconn committed to a $7 billion investment to build flat screen computer displays in Wisconsin, creating up to 13 000 jobs. But $3 billion in promised subsidies couldn’t be arranged and the project has been scaled back to a $600 million investment and 1 400 workers.

In 2018 President Cyril Ramaphosa said South Africa was seeking $100 billion of investments over the coming five-year period. Readers are sadly aware that instead of new investment and jobs, South Africa has seen unemployment rise by one million.

Competition for investment is fierce, both globally and within national borders. It’s far too early to say that Ohio will win in semiconductors. Arizona, some 2 000 miles to the west, already has a dozen semiconductor fabs and Intel is hedging its Ohio bet by investing another $20 billion in an additional fab outside Phoenix. Arizona commerce chief Sandra Watson says Phoenix, not Columbus, in ten years “will be the epicenter of the semiconductor industry.”

The views of the writer are not necessarily the views of the Daily Friend or the IRR

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Washington writer Barry D. Wood for two decades was chief economics correspondent at Voice of America News, reporting from 25 G7/8, G20 summits. He is the Washington correspondent of RTHK, Hong Kong radio. Wood's earliest reporting included covering key events in South and southern Africa, among them the Portuguese withdrawal from Mozambique and Angola and the Soweto uprising in the mid-1970s. He is the author of the book Exploring New Europe, A Bicycle Journey, based his travels – by bicycle – through 14 countries of the former Soviet bloc after the fall of Russian communism. Read more of his work at Watch