Design News is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Electronics Suppliers Forging Ahead on Capex Investments

Image courtesy of Charles Knowles / Alamy micronplant.jpg
Memory supplier Micron has announced ambitious plans to expand its U.S. manufacturing footprint.
Buoyed by the recent passage of CHIPS Act, companies look to fortify onshore investments.

With most electronics companies having announced their June quarter earnings, the near-term prognosis is somewhat mixed, with some of the largest suppliers forecasting growth but not at the robust pace seen over the past few years. But this has not stopped suppliers from announcing ambitious plans to expand their U.S. manufacturing footprint, particularly considering the recent approval of the CHIPS and Science Act and the stated push by companies to move critical manufacturing back onshore to mitigate global supply-chain issues.

Two of those companies include Intel and Micron. Last week, Intel announced a co-investment program that introduces a new funding model for the capital-intensive semiconductor industry. Under the program, Intel signed a definitive agreement with the infrastructure affiliate of Brookfield Asset Management, one of the largest global alternative asset managers, which will provide Intel with a new, expanded pool of capital for manufacturing buildouts.

Under the agreement, the companies will jointly invest up to $30 billion in Intel’s previously announced manufacturing expansion at its Ocotillo campus in Chandler, Arizona, with Intel funding 51% and Brookfield funding 49% of the total project cost. Intel will retain majority ownership and operating control of the two new leading-edge chip factories in Chandler, which will support long-term demand for Intel’s products and provide capacity for Intel Foundry Services (IFS) customers. Intel expects the Brookfield transaction to close by the end of 2022.

The funding announcement should give Intel a much-needed boost to ramp up its onshore manufacturing initiatives to meet the future production needs of the semiconductor industry and help mitigate some of the supply-chain issues involved with offshore manufacturing, given the unstable geopolitical climate in key locations such as China.

The move could also restore some shareholder confidence as the semiconductor supplier has seen its fortunes take a dip recently. Intel reported a second-quarter loss due to falling demand for PCs and has issued a cautious near-term forecast. Rival semiconductor suppliers AMD and Nvidia have also issued conservative near-term forecasts.

U.S. memory manufacturer Micron is also betting on onshore manufacturing. The company recently announced it would invest $40 billion through the end of the decade to build leading-edge memory manufacturing in multiple phases in the U.S. Micron expects to create 40,000 new jobs in the U.S., including 5,000 highly technical and operational roles. To help achieve these goals, Micron expects to bolster education, workforce training, transportation, and several other services. 

Micron, headquartered in Boise, Idaho, has manufacturing in Boise and Manassas, Virginia, along with a design center in Atlanta. The company’s offshore manufacturing locations include Hiroshima, Japan; Singapore; Muar and Penang, Malaysia; Taichung and Taoyuan, Taiwan; and Xian, China.

The same global geopolitical uncertainty leading U.S.-based companies to intensify their onshore manufacturing efforts has also prompted some multi-national electronics suppliers to consider strengthening their onshore presence.

Last month, online news reports stated Korean electronics supplier Samsung was considering expanding its manufacturing plants in Texas. The company would reportedly spend $200 billion on 11 plants, two located in Austin, and nine in Taylor, TX, where Samsung plans to invest $17 billion on an advanced facility.

Spencer Chin is a Senior Editor for Design News covering the electronics beat. He has many years of experience covering developments in components, semiconductors, subsystems, power, and other facets of electronics from both a business/supply-chain and technology perspective. He can be reached at [email protected]

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish