Ohio’s rustbelt turns into a magnet for chip fabs

In Licking County, Ohio, massive red cranes dot the landscape and orange traffic signs warn motorists that trucks are entering the highway.

It is here, about 25km north-east of the state capital, Columbus, that Intel, the semiconductor giant, is building two new chip factories. The $20bn investment has been touted by local government officials as the single biggest economic development project in the history of Ohio.

The mega-site, spanning some 1,000 acres of predominantly former farmland, could accommodate eight chip factories, or fabs, with a total investment of as much as $100bn over the next decade. That would make it one of the largest semiconductor manufacturing facilities in the world.

But, for now, the initial phase of the construction project, which is slated to be completed at the end of 2025, has become emblematic of the economic development that has supercharged growth in this corner of the country. Once considered part of America’s rustbelt, it is now known among enthusiastic investors as “Silicon Heartland”.

It is also a hallmark of the White House’s industrial strategy to incentivise high-tech manufacturing in the US, and a clear example of both the opportunities and challenges posed by such large-scale investments.

“‘Made in Ohio’ and ‘Made in America’ is no longer just a slogan — it’s happening,” said US president Joe Biden at a groundbreaking ceremony for the Intel site in September 2022. “It’s a reality today. And it’s just beginning.”

The state of Ohio offered Intel some $2bn in incentives for the project, including a 30-year tax break.

The semiconductor giant also stands to draw on federal funding from the Chips and Science Act, which Biden signed into law in summer 2022, weeks before the Intel groundbreaking in Ohio. This legislation, aimed at making the US more competitive with China, will provide some $52bn in subsidies for chip manufacturers across the US.

The investments are expected to deliver tens of thousands of new jobs in Ohio alone. Intel has said that the initial phase of its “Ohio One” project will create 3,000 high-paying jobs with average annual wages of $135,000 across the two factories. Building the fabs will rely on some 7,000 construction workers, and local leaders say they expect thousands more jobs to be created as Intel suppliers gravitate to the area and the regional service sector expands.

And Intel is far from the only major corporation to be pouring investment — and bringing jobs — to the region. Weeks after Biden signed the Chips Act into law, Japanese carmaker Honda and South Korean battery-maker LG Energy announced plans to invest up to $4.4bn in a new plant to build lithium-ion batteries in Fayette County, about 70km south-west of Columbus, to create 2,200 more new jobs in the region.

Other major projects in the region include several planned new data centres from the likes of Amazon, Google and Facebook parent Meta. Mike DeWine, the Republican governor of Ohio, announced in June this year that Amazon Web Services intended to invest $7.8bn in data centres in central Ohio by the end of the decade. In September, Google said it would invest another $1.7bn to build three more data centres in the state.

“We’re on the beginning of the beginning of the journey to reset the geopolitical landscape of economic development,” says Kenny McDonald, president and chief executive of the Columbus Partnership, a local civic organisation. “We like to think Columbus is at the centre of that conversation.”

But, while many in the community have celebrated the investments, others have warned about the short-term challenges posed by a shortage of construction workers — not to mention the longer-term strains the new development could put on local housing and infrastructure.

Since 2000, the Columbus region’s population has increased by a third, adding more than half a million people and making it the fastest-growing metropolitan area in the Midwest, according to US Census data.

This growth has already put pressure on the local housing market, with demand outstripping supply, leading to rising prices.

The Columbus region’s population is up a third since 2000 but success is putting strains on housing

Before the Intel project was announced, the city was already projected to have a shortage of as many as 110,000 housing units by 2032. Vogt Strategic Insights, a local property research group, estimates that rates of construction need to more than double, from about 8,000 new units per year to nearly 20,000, to avoid the shortfall.

Still, community leaders say they are well aware of the problems — and businesses and local and state officials are working together to provide long-term solutions.

“Everything requires a long-term view. We are looking at generational changes in infrastructure, transit, even housing,” says McDonald, who adds that businesses, the government, civic groups and academics at nearby Ohio State University are working “to try and bring all of these things together”.

His view is echoed by Brian Mooney, regional general manager in Columbus for Turner Construction, a building group. “The corporate community and the local government, everybody working together, is going to allow us to be very, very successful,” he says. “There will be bumps, but I think it is going to be well worth it.”