Texas Instruments is deepening its bet on domestic semiconductor production this week with a groundbreaking ceremony for an $11 billion manufacturing plant in Utah.
The Dallas-based chipmaker is starting construction on a new 300mm semiconductor fab in Lehi, where an existing fab it acquired from Micron Technology in 2021 for $900 million is already in operation.
Despite weak demand for chips this year, the company continues its long-term reliance on electronics to power everything from cars and trucks to machines used in manufacturing plants around the world. ing.
Earlier this year, Texas Instruments announced plans to build a second factory in Utah. With production planned for as early as 2026, the factory will be able to produce tens of millions of analog and embedded processing chips each day.
Habib Ilan, TI's president and CEO, said in a statement that these chips are “essential to almost every type of electronic system today.” “This new plant is part of our long-term 300mm manufacturing roadmap to build the production capacity our customers need for decades to come.”
TI's wafer fabrication facility produces semiconductors in a sterile environment, using a 400-step process to transform 300-millimeter wafers into some of the world's most important technologies.
In addition to its existing Lehi facility, the company operates domestic chip manufacturing plants in Dallas and Richardson, and is investing up to $30 billion in four factory facilities under construction in Sherman. The company completed a $6 billion expansion of its Richardson facility in 2022.
Utah leaders describe TI's $11 billion investment as the largest in state history. The new factory is expected to create approximately 800 permanent jobs and thousands of other jobs during construction.
“TI's expanded manufacturing presence in Utah is transformative for our state, creating hundreds of good-paying jobs manufacturing technology that is critical to Utah,” Utah Governor Spencer Cox said in a statement. It will be,” he said.
TI also committed $9 million to a Utah school district to develop the state's first science, technology, engineering and math learning community for kindergarten through 12th grade. The multi-year initiative aims to further embed her STEM concepts in classrooms in the 85,000-student district.
Outlook
Texas Instruments is the largest manufacturer of analog semiconductors, producing billions of analog and embedded processing chips annually for approximately 80,000 products. The chips do everything from detecting temperature changes and registering button presses to controlling motors in devices ranging from rockets to appliances.
Because of TI's broad portfolio, its performance is seen on Wall Street as a bellwether of demand across the economy.
The company's latest quarterly results included an earnings forecast for the final three months of the year that suggests demand will remain weak.
The company announced on October 24 that it expects fourth-quarter sales to be between $3.93 billion and $4.27 billion. Analysts had expected it to be about $4.49 billion.
Chip investors are waiting for signs that electronics makers are ready to clear piles of inventory and increase orders again. TI claims that their products have a shelf life of up to 10 years. That means inventory buildup isn't as much of an issue as other chipmakers, and could even allow the company to respond more quickly when demand picks up.
TI has budgeted $5 billion annually for new plant and equipment through 2026. “You should expect that,” Chief Financial Officer Rafael Lizardi told analysts last month.
“We are very pleased with the progress in our manufacturing expansion, which provides geopolitically reliable production capacity to support our customers' growth over the next decade,” he said.
TI's investment decision included receiving funding through the CHIPS Act, the Biden administration's program that injects approximately $53 billion in federal funding to boost the domestic chip industry. Lizardi said the company is working on applying for government grants.
“We strongly believe we are in a very good position to receive these funds,” he said. “We believe it will be meaningful to our manufacturing operations in Texas and Utah.”
This article also used information from Bloomberg.
