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Intel Government United States Hardware

Ohio Lured Intel's Chip Plant with a $2 Billion Incentive Package (apnews.com) 150

Posted by EditorDavid from the cash-incentives dept.
Ohio promised Intel roughly $2 billion in tax breaks and incentives to attract its $20 billion chip-making factory to the state, according to the Associated Press. The state's development director tells them it may be the biggest economic development deal in history.

Intel's hoping it creates a powerful new technology hub in the Midwest, while also eventually addressing an ongoing chip shortage, according to the article. Unfortunately, the factory's production isn't expected to come online until 2025, though "The complex could grow much larger and more quickly, Intel executives said, if Congress approves a $52 billion bill that would invest in the chip sector and help ensure more production in the U.S." Intel CEO Patrick Gelsinger said the total Ohio investment could top $100 billion over the decade, with six additional factories, making it one of the world's biggest chipmaking sites....

Ohio's offer includes $600 million to help Intel offset the cost of building the factories, which is more expensive than it would be in Asia, said Lydia Mihalik, the state's development director. The state also will pay nearly $700 million for roadwork and water infrastructure upgrades, including a system that will allow the plant to reuse wastewater. The state Legislature this summer approved a 30-year tax break that will allow Intel to save $650 million.

The state's share will be money well spent because the Intel facility will not only create jobs, but also make Ohio more attractive to industries such as auto, aviation and defense that rely on chips, Mihalik said. "These investments will not only ensure that this project is successful here, but will also be supporting the region by increasing local infrastructure to support future growth," Mihalik said.
The article also cites the Semiconductor Industry Association's estimate that America's share of the world's chip manufacturing has declined from 37% in 1990 to 12% today.
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Ohio Lured Intel's Chip Plant with a $2 Billion Incentive Package More

Ohio Lured Intel's Chip Plant with a $2 Billion Incentive Package

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  • This makes it sound like they won something (Score:5, Interesting)

    by rsilvergun ( 571051 ) on Sunday January 30, 2022 @11:44PM (#62222721)
    But modern chip plants don't bring a lot of jobs. We need to stop giving companies money in exchange for nothing but the vague promise of some jobs and maybe some tax revenue. I've said it before and I'll say it again if they want my tax dollars they need to give us something for it and that's something is stock. And not the cheap stuff I want proper voting shares. No more corporate welfare Queens.

    • So Intel claims this plant will create 3000 jobs. It's said Samsung's upcoming Texas plant will create 1800 jobs. "Many" of these jobs will be highly-skilled, according to TFA.

      We do have some chip manufacturing happening in the US already, and obviously a whole lot of existing manufacturing is happening in Taiwan and China... anyone know how many actual well paying, skilled jobs exist in one of these existing plants?

      • Re:This makes it sound like they won something (Score:4, Informative)

        by rsilvergun ( 571051 ) on Monday January 31, 2022 @07:33AM (#62223153)
        Typically such claims include the construction workers and not the long-term jobs created by the factory. Every one of these projects overstates the number of jobs created. Usually if the government had taken the subsidy and just giving it directly to people they'd have come out ahead. That was the case when Amazon was trying to get those massive subsidies out of New York and it's why New York sent them packing.

        • Re: (Score:2)

          by GoTeam ( 5042081 )
          They also count jobs during construction (on previous "relocations", I'm not sure about this specific project). There are a lot of skilled jobs involved when designing and building facilities. Like building a datacenter, it take a lot of people to build it, but not many to run it. Chip factories are much more complex for many reasons, but I could see the same job issues holding true here. Actual paid jobs going forward could be much lower than the numbers they project.

        • Usually if the government had taken the subsidy and just giving it directly to people they'd have come out ahead.

          Moron. Where would the 2 billion come from to give to those people? This is the kind of thinking that you engage in that REALLY pisses me off. You just wave your hands and there are infinite resources. WTF? The 2 billion is to come from the operating revenue of the plant. That value actually has to be created in order for it to exist... and yet here you are giving it back to the people and that doesn't even make sense.

          Dude, seriously. Go away. Your dreams are fine and all, but they are annoying to those of

    • The problem with gov getting company shares is company still has an incentive to screw over whatever local jurisdiction to make the most profit. (And don't start dreaming about voting shares, not viable). And laws can regulate specific actions, not intangible intent.

      The real way to keep from getting nothing but vague promises of jobs is to structure it in a way that there's a financial motivation (in other words, a dependency) on the actual materialization of those benefits, rather than the mere fact the bu

      • I expect the politicians understand very well. Itâ(TM)s the voters amd influencers who have an understanding deficit.

      • so you can put a gov't in charge that will vote in the company's boardroom in ways that help the taxpayer.

        This does still mean you need to show up and vote in your primary election so you're not picking between a giant douche and a turd sandwich, and it means you have to google the candidates and read up on them so you can figure out which ones are corporate shills and which ones ain't. But I've been voting in primaries for over 10 years now and there's been a pro-consumer candidate every time, they jus
      • The problem with these structures is that many of the tax breaks start flowing day one. But many of the promises take years to deliver. And by then, the company is looking to renegotiate and the politicians are looking for a way to save face.

    • Re: (Score:3, Insightful)

      by Narcocide ( 102829 )

      We need more chip fabrication sites on US soil for national security. I, for the record, oppose this comment being modded "Offtopic" but you're just plain wrong about the potential value of this. Who cares if it doesn't make many jobs? Ohio doesn't have many people.

    • Re: (Score:2)

      by gtall ( 79522 )

      Well, in defense of the plant, it is good to have more chip making facilities out of reach of the CCP.

      However, the value of this plant is also measured in how many politicians can crow about successfully luring an Intel plant to Ohio on the backs of Ohio taxpayers. That gift will continue to give for a few years until the politicians have milked it dry and have moved on.

      The U.S. should now argue that Intel has been properly rewarded in their efforts to build a new chip plant in the U.S. and now is off the M

    • But subsidising corporations & letting them evade taxes is the American way!

    • But modern chip plants don't bring a lot of jobs. We need to stop giving companies money in exchange for nothing but the vague promise of some jobs and maybe some tax revenue.

      The answer is pretty simple, As a Republican, Dewine will probably profit well from this. As well as his minions.

      I'd wager that this will end up being Foxconn rev 2

    • Not all jobs pay the same amount of taxes. Even if what you're saying is true -- a claim for which you have supplied no supporting evidence -- the highly skilled jobs they do provide will be much higher paid. Thanks to your favored progressive taxation scheme, these people will pay much more per-person in taxes than the rest of the state's population. This means the state grows its tax base without a corresponding increase in head count, which means there are more tax revenues overall to spread around fo

    • About 2/3 of that is government compensating for additional building costs vs. Asia, much needless, and simply not taxing money it never would see anyway if they didn't build there, and so it isn't a loss.

      The remaining third is increasing infrastructure to support it.

      "But I don't..."

      Bye. Off to somewhere else.

      "But..."

      Buh bye.

    • Columbus needs to take a nice big caveat emptor pill with regard to Intel. I lived and worked in Colorado Springs in the 90's tech boom and watched as so many big tech firms and startups flocked to the town. Intel ginned up a lot of excitement and interest in the late part of the decade, telling the city leaders that their new chip fabrication plant on the north end of town would bring tens of thousands of jobs and spark a blooming of the semiconductor industry in southern Colorado.

      Indeed, they did begin

  • Welcome to Wisconsin (Score:3, Funny)

    by Anonymous Coward on Sunday January 30, 2022 @11:45PM (#62222723)

    Hey Rocky, watch me pull a rabbit out of my hat!

    Again?

    Nothing up my sleeve...

    • Re: (Score:2)

      by jmccue ( 834797 )

      Hey Rocky, watch me pull a rabbit out of my hat!

      Again?

      Nothing up my sleeve...

      Wish I had mods, I usually do not waste mods on AC, but this is very funny!

  • WTF (Score:2)

    by NFN_NLN ( 633283 )

    > The state's share will be money well spent because the Intel facility will not only create jobs, but also make Ohio more attractive to industries such as auto, aviation and defense that rely on chips

    Wait until someone tells them about this new disruptive technology I read about --shipping. It means the place where materials are made and the place they are used don't have to be the same place.

  • Billions for a billion $ company (Score:5, Interesting)

    by bobjr94 ( 1120555 ) on Sunday January 30, 2022 @11:59PM (#62222745) Homepage
    but nothing for a small business. Helping the companies who don't need it while doing nothing for the businesses that need it

    • Re:Billions for a billion $ company (Score:4, Insightful)

      by bookwormT3 ( 8067412 ) on Monday January 31, 2022 @01:13AM (#62222813)

      Well, most small businesses aren't willing and/or capable (emphasis on the not capable) of spending $20 billion to build something in Ohio. The only thing Ohio can do to make it happen in Ohio is to make it cost less to do it there than somewhere else. So Ohio is getting a $20 billion construction project (read: stimulus project) and all Ohio had to do was agree that instead of a huge percent of $0, which is what they're getting now, they'll settle for a smaller percent of what tax revenue that $20B project produces.

      And... after the fab plant is built it's not exactly easy to pack up and move it somewhere else. So even if it's entirely staffed by robots controlled from India or something, it's already lifted the local economy (producing increased revenue), which comes around to lift the local economy again (producing more revenue again). The trick is to make sure the business doesn't take the incentives and then close, like the latest poorly-thought-out Walmart incentive or a hundred other examples. So as long as Intel keeps running the plant ("sunk cost" of $18B) Ohio can rely on some sort of economic-boosting activity.

      Not giving Intel incentives means the decisions will be made on an even cost/benefit basis. Look at AOC not wanting an Amazon HQ2 in NY, and guess what she didn't get one, she got far crappier jobs. She may or may not be happy about that, but I hear there were a lot of grumbles from the constituents who would have liked the jobs, even if it meant working for Amazon. (it seems to me that complaints about the quality/pay/conditions of amazon jobs need to go to OSHA or DoL, not to the tax revenue meetings. And I bet the people who complain the loudest about Amazon working conditions aren't so upset about it so as to "vote with their feet" and buy elsewhere) I'm sure whatever permanent economic impact (local jobs, etc all lifting local tax revenue) Intel has in Ohio will be higher quality.

      • Re: (Score:2)

        by Kokuyo ( 549451 )

        If I remember correctly the people in Germany thought the same thing when they agreed to a Nokia factory... I believe.

        Did not pan out as they envisioned as far as I remember and no, it wasn't because Nokia went belly up. They built the building and then fucked right off AFAIR.

      • Re:Billions for a billion $ company (Score:4, Insightful)

        by olsmeister ( 1488789 ) on Monday January 31, 2022 @02:58AM (#62222909)
        Tax treatment should be consistent and fair for both companies and people. Honestly any deviation from this should be illegal and challenged in court, and if upheld in court then the constitutions need to be changed. Government should not be playing favorites or picking winners. So the big company gets an enormous tax break to locate there, while all the secondary job creators (restaurants, grocery stores, auto repair shops, etc) get no such break. I do not see how that is all right. Since corporations are people too, imagine if government treated its citizens this way. Me, multi-billionaire that I am (for this example) decides I want to move. I announce I'll be entertaining offers from various states that I'm considering making my new home in for what kind of tax breaks they'll give me to lure me to move there and spend my fortune there. I choose Ohio because they will not charge me any state income tax or property tax at all for the first 20 years I live there. Do you think my neighbors would be OK with that? Why is it OK to do this with companies but not people? Everyone should be treated equally.
        • You should move to TX to see it in action. Property tax is huge here. A typical house in Austin is now 500K x 2% = 10K/year. And there is no cap. BUT, you can protest, and in fact people like Michael Dell take it all the way to the courts. Way back when he built his estate for 110M. Of course he did not want to pay tax on a 110M. So he does what normal people do first, file a protest. Protest is denied, I mean he just did build it. Escalate to next level, denied, escalate to court, wins. Why, because he thr

        • Re: (Score:2)

          by ceoyoyo ( 59147 )

          Dude, cash in briefcases is illegal. You can't make tax incentives illegal too. How is anybody supposed to make a bribe then?

      • Re: (Score:2)

        by AmiMoJo ( 196126 )

        It says "tax breaks and incentives", so I wonder exactly what the incentives are. The problem is you get into a race to the bottom. In fact you go through the bottom and end up paying these companies money in the hope of the voters seeing a few jobs as worth the price. It's usually infrastructure stuff, new roads and the like.

      • Re:Billions for a billion $ company (Score:5, Insightful)

        by Solandri ( 704621 ) on Monday January 31, 2022 @04:54AM (#62223003)
        If you set the state's tax rate at x% (generalizing here - I realize there are lots of different taxes), you do so because you believe that x% taxation results in the best balance of taxes (which inhibit business) and government services paid for by those taxes (which help business). That is, you believe that at x% taxation, the net effect of these two contrary factors yields the best environment for everyone in your state.

        If you then give someone (business or individual) a tax break, you're basically admitting that were wrong - you now believe your x% tax rate is too high. And that the environment in your state can be improved by a lower tax rate. In that case, instead of giving just this one business or individual a tax break, you should give it to everyone to remain consistent with this epiphany you've had about lower taxation. What's good for the goose is good for the gander.

        If you honestly believe that x% is the best tax rate, and a company refuses to move into your state unless you give them a tax break, then you should simply tell that company not to let the door hit its ass on the way out. Because if you believe x% taxation is ideal, you also believe that taxing a company at less than x% would result in a worse environment for everyone in your state.

        When you apply different tax rates to businesses or individuals in the same circumstances, you're basically forcing one group to subsidize the other. Give a tax break to Intel that you don't give to mom and pop shops, and you're basically saying you believe mom and pop shops should subsidize Intel.

        • When you apply different tax rates to businesses or individuals in the same circumstances, you're basically forcing one group to subsidize the other.

          Congratulations, you just described the entire US tax policy dating back to at least our departure from the Gold Standard, and really since the founding of the country itself. By design, these different tax rates are literally codified into tax law via loopholes, deductions, credits, and every other tactic you can think of. You can thank in part the commer

        • If you then give someone (business or individual) a tax break, you're basically admitting that were wrong - you now believe your x% tax rate is too high. And that the environment in your state can be improved by a lower tax rate.

          If all businesses were of equal value, your logic would make sense. What you are describing is an egalitarian fantasy. Reality is far more subtle than you are giving it credit for. What is more valuable, a food market or a bank? I would say food market, but just barely. What is more valuable, a retail store or someone selling you car warranties? And yet your analysis assumes that all have the same relation to the tax rate.

      • The only thing Ohio can do to make it happen in Ohio is to make it cost less to do it there than somewhere else.

        True, but the way that is supposed to work is that you make your tax laws competitive so that taxes apply equally to everyone and then companies can look at your taxes and infrastructure and compare it to others. Large companies essentially negotiating a private tax rate just for them ought to be illegal since it is highly anti-competitive as your average small business does not get this opportunity, nor does your average citizen. If they are going to allow haggling on taxes then it needs to be open to eve

      • How much of the $20 billion will be spent in Ohio, rather the on the specialized equipment used in the factory that is built elsewhere and only installed in Ohio?

    • but nothing for a small business.

      Subsidizing Intel is stupid. Subsidizing small businesses is equally stupid.

      Let's end the subsidies and let the market decide which businesses succeed.

      • Let's end the subsidies and let the market decide which businesses succeed.
        Then you end up in a 3rd world shit hole where half the population is to poor to have food, shelter, education - or are slaves.

        Subsidizing small businesses is equally stupid.
        There are quite a few countries that show: you are wrong.

  • Will it work better than the FoxCONn deal? (Score:4, Informative)

    by klipclop ( 6724090 ) on Monday January 31, 2022 @12:01AM (#62222751)
    Will this work out better than the FoxCONn LCD plant in Wisconsin that never materialized? My first thought is how much Ohio tax payer money did the politicians and their lawyers give away in the poorly written loophole ridden contracts? Probably buying nickels for dollars in the end. (which they won't be around for anyhow)

    • Re:Will it work better than the FoxCONn deal? (Score:5, Informative)

      by timeOday ( 582209 ) on Monday January 31, 2022 @12:59AM (#62222803)
      I guess we'll see. But anyways the incentives Wisconsin offered FoxConn were performance-based, so they were sharply reduced along with foxConn's dowscoping the facility.

      Wisconsin Governor Tony Evers said the new agreement will save Wisconsin taxpayers a total of $2.77 billion compared to the previous contract, maintain accountability measures requiring job creation to receive incentives, and protect hundreds of millions of dollars in local and state infrastructure investments made in support of the project.

      The state will reduce the tax credits authorized for the project to $80 million from $2.85 billion.

      And as of just this past December:

      Foxconn Technology Group has qualified for $28.8 million in state tax credits, marking the first time the Taiwan-based company has secured state aid since breaking ground on its southeastern Wisconsin facility in 2018.

    • But I am sure the politicians involved got a nice trip to Silicon Valley, and maybe if they were really lucky they even got an Intel T-shirt!

      • But I am sure the politicians involved got a nice trip to Silicon Valley, and maybe if they were really lucky they even got an Intel T-shirt!

        and Ohio will learn "Intel Inside" has a second meaning...

  • So they had bad CEO for over a decade and now they want a corporate socialism and billion dollar handout. Screw them, since they don't give a crap about customers.
  • That seems like a fairly modest amount. We lured a Facebook data center with the equivalent of 13 billion US$ incentive, in the Netherlands.

  • The 1980's auto transplants had many a state vying to get the Japanese to setup a local automobile factory in their state with various incentives. In The Reckoning [goodreads.com] by David Halberstam describes this...the more things change the more they remain the same...as French writer Jean-Baptiste Alphonse Karr wrote.

    JoshK.

  • Clearly more cheating. And they have the gall to blame China for cheating, Just remember, the US could not make solar panels without subsidies, and the cost of energy saw few raw silicon foundries built where electricity was cheapest. Lastly, subsidies encourage home grown industries to be sluggish and fall behind the curve. Intel needs more snail bait to weed out slug management.

  • Tax money never to be seen again... (Score:4, Interesting)

    by bradley13 ( 1118935 ) on Monday January 31, 2022 @04:30AM (#62222967) Homepage

    It's a race to the bottom for states and localities. That's a pile of tax money they'll never see again. $600 million subsidy for building the plant? Because it would be cheaper in China? Intel is going to build in the US, that is already a given. So that's $600 million that didn't need to be spent.

    Anyway, not counting the (very temporary) construction jobs, they promise 3000 jobs. You know that's overly optimistic, but let's run with it. $2 billion divided by 3000 means that Ohio is paying $2/3 million per job. That's just nuts - there is no way they will ever recover that much money.

    Also, let's not forget that this is on top of the federal subsidies that are just about guaranteed to flow. Intel screws the pooch, and gets government bail-outs at all levels.

    • $2 billion divided by 3000 means that Ohio is paying $2/3 million per job. That's just nuts - there is no way they will ever recover that much money.
      With your math skills it should be easy for you to figure how much taxes you pay over a course of let's say 30 years. Now consider the factory is probably regularly revamped and runs for 50 or more years ...

      • $2 billion divided by 3000 means that Ohio is paying $2/3 million per job. That's just nuts - there is no way they will ever recover that much money. With your math skills it should be easy for you to figure how much taxes you pay over a course of let's say 30 years. Now consider the factory is probably regularly revamped and runs for 50 or more years ...

        What's your point? Let's be generous and assume no discount to get net-present-value: What kind of salary does someone have to earn, in order to pay $2/3 million in state taxes? Ohio's maximum income tax bracket is under 5% and sales tax is under 6%. The average job had better pay more than $200k/year. For a factory job, in Ohio? Not gonna happen...

  • ... approved a 30-year tax-break ...

    I don't know if the corporation says it can't afford the full tax debt, or if politicians think there's more tax revenue but laws are subtly re-written when tax-breaks end: The most common being, the factory can work more hours. Sports, recreation, entertainment businesses cop the brunt of it. Plus, competing factories (or economic substitutes) don't get the same economy of scale and go out of business.

  • Stay vigilant! If we're not careful, some sort of actual economic activity (like making or doing actual things) might break out.

  • Each of those 3000 jobs has to somehow generate 66K in tax revenue *every year* for the next 10 years -

    Let's see how that works.

    In order to pay 66K in state income taxe, I estime a gross annual income of $3 Million.
    I'll be generous, and cut that in half, and assume the 33K difference is somehow made up in sales tax - after all someone earning 1.5 million is gong to buy a lot of crap, and pay a lot of sales tax in Ohio.

    This still implies that Ohio is expecting the employment multiplier to be greater than 10,

  • as long as most of the incentives come AFTER the plant is up and running. No "cash up front" and the state winds up with 2-billion dollar warehouse.

  • $2 Billion for a $20 Billion factory is much better than Scott Walker negotiated for Wisconsin when Foxconn came calling.
    The Republican led state agreed to $3 Billion in assistance for a $10 Billion plant. This is neither fiscally sound, nor the sign of a great negotiator.

    I'm not a big fan of using tax money to pick large companies as winners, and small local companies as losers, but if you are going to do something like this you might as well have a decent ROI.

    There is a risk that when subsidies run out,

  • Corporations "chose" in the name of profit to fire Americans to send jobs overs seas. Communities decimated by corporate greed now are willing to pay even more. What makes this notion even more egregious is income tax for corporations and wealthily has dropped from 90% in the 1960's to 70% in the 1970's todays 21% (top corporate tax rate). The result leaves education unfunded, students with crushing debt, infrastructure in disrepair, and municipalities selling off utilities just to stay solvent. As S

    • This tennis ball really sucks. It chose to roll down that hill into a puddle. Of course, it has nothing to do with the backhoe operator who made that hill where we didn't need one.

  • Given that almost *zero* tax breaks given to companies are *ever* made up by other taxes, this is a tax break for an incredibly wealthy company, and the bottom 90% of Ohioans will pay more taxes for less.

  • You have low labor costs, and more importantly, LOTS of water. Water is heavily used in chip manufacturing. Az is no longer good for this

  • Ignoring all the usual political comments, assuming all the rosy predictions made to justify this deal come true, how many years will it be before the state reaches the break-even point? 5-years? 10-years? Longer? And then where is that $2bn coming from? What state program budgets will get the hatchet treatment if things don't go exactly as planned? Will payroll for state legislators and the governor be one of them?

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