Intel announced Tuesday that it will spend $ 20 billion building two new chip factories, called fabs, in Ocotillo, Arizona.
The announcement, coinciding with the first public statements from new CEO Pat Gelsinger since he took office, indicates that Intel will continue to focus on manufacturing during industrial changes that have led competitors to design and manufacture more and more chips. separate.
The news comes during the global shortage of chips that drags the auto industries to electronics and worries that the U.S. is lagging behind in semiconductor manufacturing.
“Intel is and will continue to be a leading developer of process technology, a major semiconductor manufacturer and the world’s leading silicon supplier,” Gelsinger said.
Shares of Intel rose more than 5% in extended trading on Tuesday.
Intel also said it will begin acting as a “foundry” or manufacturing partner for other chip companies that focus on semiconductor design, but need a company to make the chips. Intel said its foundry subsidiary will be called Intel Foundry Services and will be led by Randhir Thakur, Intel’s current senior vice president.
Gelsinger said the foundry business will compete in a potentially $ 100 billion market by 2025. A slide that Intel showed suggested that companies like Amazon, Google, Microsoft and Qualcomm could be customers of the business. Microsoft CEO Satya Nadella appeared at the Gelsinger talk at a demonstration in support of Intel’s move.
Intel’s commitment to manufacturing has implications for national security. Intel said it is partnering with IBM to improve chip logic and packaging technologies, which “will improve the competitiveness of the U.S. semiconductor industry and support key U.S. government initiatives.”
Intel currently operates four factories, called “wafer fabs,” in the United States. In addition to its expansion site in Arizona, it also has factories in Massachusetts, New Mexico and Oregon. It also manufactures chips in Ireland, Israel and has a single fab in China.
Intel Foundry will offer an alternative based in the United States and Europe to Asian chip factories.
In February, President Joe Biden said domestic semiconductor manufacturing is a priority for his administration. His administration hopes to address the shortage of chips and address concerns from lawmakers that outsourcing chip manufacturing had made the U.S. more vulnerable to supply chain disruptions.
In an executive action, Biden initiated a 100-day review that could boost U.S. chip companies with additional government support and new policies.
“Today’s Executive Order, combined with full funding from the CHIPS Act, can help match global competition for semiconductor manufacturing leadership, allowing U.S. companies to compete on an equal footing with companies. foreigners heavily subsidized by their governments, ”Intel said time in response to the executive order.
Gelsinger took over Intel on Feb. 15 from former CEO Bob Swan. Although he was recently the CEO of VMWare, he began his career at Intel and his appointment has been considered a return home.
He took on a company that faced several challenges. Intel had lost its lead in semiconductor manufacturing to rivals based in Asia, most notably TSMC. Intel’s most advanced chips use a 14-nanometer process or a 10-nanometer process. They both design the chips and make them in their own factories, called fabs.
But competitors, including Intel customers like Apple and rivals like AMD, only design the processor and manufacture it in an external chip factory. These chip factories, such as TSMC and Samsung, use a more advanced 5-nanometer process, which is superior because more transistors can enter the chip of the same size, which increases power and efficiency.
Gelsinger said Tuesday that its 7-nanometer chips are on track to reach a milestone in the second quarter and that it plans to manufacture most of its products. Still, Intel will increase its use of third-party foundries, including TSMC, Samsung and GlobalFoundries, he said.