Fighting back against China: The ‘Silicon Heartland,’ Intel to build massive chip plant in Ohio

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NEW ALBANY, OH – Ohio is about to get the economic boost of a lifetime after computer chip maker Intel decided to build a massive plant in New Albany. The area beat out 40 other cities that were vying to obtain the business.

Republican Ohio Governor Mike DeWine announced the news that the State of Ohio beat out 40 others and will be the new site for an Intel manufacturing plant.

The new plant is estimated to bring an additional $20 billion in revenue to the state. Governor DeWine made the announcement with the CEO of Intel, Pat Gelsinger, the Senior Vice President and General Manager of Manufacturing Keyvan Esfarjani.

The Governor said:

“This is a major win for Ohio, and it’s really a game changer for our economic future. Intel could have put these plants anywhere in the county, in fact, there were 40 states that were competing to try and get these plants.

“And we won! Ohio won! They chose Ohio! We worked, we fought, and we won to bring these jobs to Ohio.”

Not only is this plant important to those that live in Ohio by way of job creation and an economic boost, but it is equally important for the United States.

Currently, 70 percent of semiconductor chips that are used in the country are imported from eastern Asian countries. DeWine added:

“We must make more products right here in the United States. What better place to manufacture any of them than right here in Ohio, made by Ohioans. Pat [Gelsinger], Ohioans are just darn hard workers.

“Intel’s announcement today confirms this is Ohio’s time in history. This is our time we have an opportunity to lead once again.

“Intel’s announcement today is a signal to China and the rest of the world that from now on our essential manufactured products in this country will be made in the United States of America.”

Gelsinger jumped in and described how the Intel plant will be utilized once it is fully operational. He also noted that his intention is to make this plant the largest one in the world. He said:

“We expect that Intel Ohio will become of, if not the largest semiconductor manufacturing sites in the world over the next decade. This is a great day.”

Gelsinger believes that the creation of this facility will create 3,000 direct jobs once the plant is built. Before that, he estimates that the project will bring 7,000 construction jobs to the area. He said:

“If there’s a concrete truck in the state of Ohio that isn’t working for me, I want to know about it.”

On top of the jobs that Intel Ohio will bring, Gelsinger also plans on investing $100 million to create a talent pipeline to train future workers for the company. The plan would call for a partnership between local universities and colleges to educate their future workforce. He said:

“We want your best and brightest participating with us. We need the full range of capabilities.”

Gelsinger added that he wants Intel to make Ohio into the “Silicon Heartland.” He said:

“As the company that puts silicon into ‘Silicon Valley,’ and the company that is now the catalyst for a ‘Silicon Heartland,’ Intel is committed to restoring end-to-end leadership, innovation, and manufacturing here in the U.S. Think of this as a magnet for the entire tech industry and all of this is creating new jobs.”

Democratic President Joe Biden weighed in on Ohio winning in Intel’s search for a new plant location.

He publicly thanked Republican Senator Rob Portman and Democratic Senator Sherrod Brown on helping to bring the plant to the state. President Biden said:

“This is a truly historic investment in America, in American workers. It’s never been a good bet to bet against America.”

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Experts warn global economy heading for “mother of all” supply chain issues as China locks down

The content contained herein contains editorial commentary which is the opinion of the writer.

Over the past few months, we have seen bare store shelves courtesy of supply chain issues. Many have warned for years that the United States was vulnerable as our manufacturing left our shores and went overseas.

For four years starting in 2017, former President Trump was attempting to bring manufacturing back home. Unfortunately, that was derailed after Trump lost last November’s election.

Aside from the supply chain issues, ZeroHedge that another issue may haunt the United States.

They note that over the past several weeks, Wall Street has become optimistic on US growth going forward, along with the Fed, that despite economic numbers continually showing the opposite.

That optimism has led the Fed to signal interest rate hikes, maybe as soon as March.

Alarm bells have been ringing however after the Fed last year stated the belief that inflation was only “transitory,” which turned out to be a fallacy. Current indications are we are in this for a while.

ZeroHedge warns that the Fed is poised to make not one more mistake but possibly several more—up to four—by hiking interest rates that number of times.

Combined with trying to pay off a “massive balance sheet,” all of this comes as growth on a global scale is slowing dramatically.

 

The one place beside the United States where a growth slowdown could prove especially troubling is in China.

Taken in combination with a deterioration in US consumption, and increased use of credit cards is helping to support current funding and is due for a “bubble,” we now have China, pursuing a “covid-zero” policy as well as looking to lockdown ports, again due to covid.

All of this, ZeroHedge reports spells big trouble.

Once a lone voice warning of China’s impending Covid-zero policy, now Bloomberg is joining in on warning that restrictions implemented by Beijing “are starting to hit supply chains in the region.”

As Bloomberg warns, the world economy could be headed for the “mother of all” supply chain issues.

Over the past several weeks, the omicron variant of Covid has been spreading across the United States, with a record number of Americans testing positive for the variant this week on at least one day.

Bloomberg reports that if the variant spreads across Asia, China in particular, it would result in a significant disruption in manufacturing. HSBC economists this week wrote that the disruption would be “temporary, one would hope, but hugely disruptive all the same” in the next few months.

As is, movement of goods through some of the busiest and important ports have seen shipping traffic slowed significantly, with a number of shippers now diverting to Shanghai.

It was bottlenecks such as these which eventually led to hundreds of container ships waiting off the coast of California to unload, a situation which still continues to this day.

For example, in November, there were some 80 ships offshore waiting to unload, while as of Jan 6, there were 105 ships waiting.

ZeroHedge reports that sailing schedules are already facing delays of about a week, which has freight forwarders warning of the impact on already clogged gateways both in the United States and Europe.

Last year, China locked down its ports for several days, which led to what ZeroHedge calls “an unprecedented hiccup in global logistics and shipping” which exists today.

Omicron has had relatively little impact in China compared to the West, but of course that is dependent on China actually giving accurate information. That said, Chinese officials are being cautious in order to reach their desire of zero Covid.

Scattered infections in China of both the delta and omicron variants have already seen China shut down clothing factories and cease gas deliveries in the vicinity of one of China’s largest seaports, Ningbo.

In addition, disruptions have occurred at computer chip manufacturers in Xi’an and a city-wide lockdown in Henan province Tuesday, ZeroHedge says.

Bloomberg says that any continued increases in cases in that region, it could impact the supply of iPhones and other smartphones, Bloomberg Intelligence analysts say.

Covid zero, which given the transmissibility of the omicron variant seems like a fool’s errand, yet it is something the communist nation is pursuing.

While such a policy helps to contain virus spread to a degree, it causes significant disruptions and lockdowns while officials limit the movement of people.

Repeated mandatory testing of whole cities, for example, disrupt business and production, yet the issue is nowhere near as bad as currently exists in the United States, where last week some five million people stayed home sick.

However, the news from China isn’t encouraging, with some predictions saying that China’s covid outbreak this winter could be worse than last year.

Also, the number of new cases has been larger this year in the country, and the provinces hit by the outbreaks this  year also have a higher GDP and population density.

Bloomberg noted that a number of companies are attempting to mitigate their risk by looking at alternative production facilities, according to Stephanie Krishnan, a supply chain expert at IDC in Singapore.

“We are starting to see companies mitigating risk, seeing where they can increase capabilities for production of different products in different factories so they can shift that around,” she said.

Krishnan also warned that there isn’t currently any light at the end of the tunnel, saying she doesn’t see an end to the global supply crunch anytime soon. She further cautioned that it could take several years for the current supply crunch to unwind.

This is a contrast to the optimism that many felt about the new year, hoping the so-called “Big Crunch” would be winding down, a situation which plagued both producers and consumers for much of 2021.

China’s ability to control the virus will be absolutely critical, said Deborah Elms, executive director of the Singapore-based Asian Trade Centre.

She noted that companies who don’t have supply chains centered in China may be able to avoid issues relative to China’s covid mitigation strategy.

Unfortunately, that won’t apply to everyone and certainly won’t apply to the United States, which relies heavily on China for a lot of our goods.

“Lots of products in supply chains come from outside China,” Elms said. “Given challenges elsewhere, even zero Covid doesn’t solve all the issues of disruption.”

ZeroHedge notes that all of this will make the job of the Fed extremely difficult in the coming months. A rise in interest rates is seen as a hedge against inflation, however as ZeroHedge notes, much of the inflation today is being generated on the supply side.

However, if there is a “surprise” drop in growth in the next few months, the Fed will have to delay or stagger its tightening strategy.

If they time this incorrectly, they would be hiking interest rates into a recession which will mean they would have to revert to easing again. This is referred to as a “bull-whip” effect.

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