Why Intel’s Gambit Is So Important For Mid-America

Intel Corp. CEO Pat Gelsinger presumably flew right over flyover country last week when the head of the Santa Clara, California-based giant microchip maker ended up in Washington, D.C., to share the podium as President Biden congratulated him for the decision to invest $20 billion in a chip-manufacturing complex in America.

But there was no denying attention for middle America in Gelsinger’s movements, because Biden was thanking Intel for its decision to put what will be the world’s largest chip plant smack in the middle of Ohio, on the outskirts of Columbus.

Intel’s announcement was the industrial equivalent of Amazon’s selection in 2018 of Arlington, Virginia, for its “second headquarters” and the creation of tens of thousands of jobs for that area after hot pursuit of the economic-development plum by hundreds of U.S. localities.

And Intel’s commitment carries great promise not to suffer the same fate as the “Wisconn Valley” tech ecosystem that was supposed to follow Foxconn to Wisconsin several years ago.

Assuming Intel gets some financial help from bipartisan legislation to bolster American chip manufacturing that is working its way through Congress, the 1,000-acre site in Ohio will welcome Intel’s first plant in America in 40 years and become a hub for researching and developing the company’s most advanced chips. Gelsinger went so far as to call the initiative the creation of a “silicon heartland.”

Indeed, the implications for flyover country will be profound. The initial phase of the project is expected to create 3,000 Intel jobs and 7,000 construction jobs and to support tens of thousands of additional local long-term jobs across a broad spectrum of suppliers and partners.

Intel said it could end up investing as much as $100 billion over the next decade to eventually build as many as eight chip factories in Ohio, and another $100 billion in addition on partnerships with educational institutions to expand a pipeline of talent and bolster research programs in the state.

Yet Intel’s gambit not only will make a global chip-making capital out of central Ohio but also will help create a much broader ecosystem for hundreds of miles around in the heartland, as a vast network of suppliers set up shop to feed the Intel operation.

From the git-go, Intel included some of these suppliers in its big announcement, and chiefs of at least two of these companies made it clear their own development and manufacturing footprints would be put down across the region, not just in Ohio.

Applied Materials President and CEO Gary Dickerson, for instance, said that the company will work with Intel “to build a robust semiconductor ecosystem in the Midwest.” And Seifi Ghasemi, head of Air Products, said that the Intel site “will bring renewed energy and an exciting innovation edge to the proud manufacturing heritage of Ohio and the broader Midwest.”

In other words, consider Intel’s intention to create a “silicon heartland” as a much more serious version of what state leaders in Wisconsin once hoped would happen with Foxconn’s announcement to build a huge glass-screen plant in the southeastern corner of the state.

The Taiwan-based tech giant and then-Wisconsin Governor Scott Walker announced with great fanfare in July, 2017—at Donald Trump’s White House—that Foxconn would invest $10 billion in the facility, and a huge supplier community would grow up around it. Walker even coined the term “Wisconn Valley” to describe the ecosystem Foxconn would help build in the state and the region.

But soon the whole initiative got caught up in Foxconn’s dithering over what size screens it would build and in electoral politics, with charges that Walker gave away the store in financial incentives helping scuttle his re-election campaign in 2018.

Ohio’s “silicon heartland” is highly unlikely to fall into the same abyss as Wisconn Valley for a number of reasons. They include the huge incentives for Intel and its customers of constructing a new domestic chip plant for the first time in decades and the considerable help that the federal government seems ready to give this venture because of its potential importance to the American manufacturing economy as a whole and even to national security.

Wisconn Valley enjoyed no such advantages, unless you count President Trump’s participation in the groundbreaking.

Ohio’s political and economic-development leaders worked many months to land Intel’s bold new manufacturing gambit, including passing legislation that generally authorized more financial incentives from the state—but that were implicitly aimed at luring Intel.

Now, they’ve created a model for how other locales in America’s industrial heartland can catapult themselves to the cutting edge of the digital age.