A total of $20 billion is to be spent by Intel to build two new chip factories, called fabs, in Chandler, Arizona, U.S. Intel made the announcement as its stock rose as much as 5% on the news in extended trading on Tuesday.
The announcement, coinciding with new CEO Pat Gelsinger’s first public remarks since taking over the job, signals that Intel will continue to focus on manufacturing during industry shifts that have led competitors to increasingly separate chip design and chip fabrication.
The news comes during a global chip shortage that is snarling industries from automobiles to electronics and worries the U.S. is falling behind in semiconductor manufacturing.
“Intel is and will remain a leading developer of process technology, a major manufacturer of semiconductors, and the leading provider of silicon globally,” Gelsinger said.
Intel also said that it will act as a “foundry,” or a manufacturing partner, for other chip companies that focus on semiconductor design but need a company to actually make the chips. Intel said its foundry division will be called Intel Foundry Services and will be led by Randhir Thakur, a current Intel senior vice president.
Gelsinger said the foundry business will compete in a market potentially worth $100 billion by 2025 and will manufacture a range of chips, including chips based on ARM technology, which are used in mobile devices, and has historically competed with Intel’s favored x86 technology.
A slide displayed by Intel suggested that companies including Amazon, Google, Microsoft and Qualcomm could be customers for the business. Microsoft CEO Satya Nadella appeared at Gelsinger’s talk in a show of support for Intel’s move.
Intel’s commitment to manufacturing has national security implications. Intel said it is entering into a partnership with IBM to improve chip logic and packaging technologies, which will “enhance 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 site in Arizona, which is being expanded, it also has fabs in Massachusetts, New Mexico and Oregon. It also makes chips in Ireland, Israel and has a single fab in China.
Intel’s foundry will offer a U.S. and Europe-based alternative to Asian chip factories.
In February, President Joe Biden said domestic semiconductor manufacturing is a priority for his administration. His administration hopes to fix going chip shortages and address lawmaker concerns that outsourcing chipmaking had made the U.S. more vulnerable to supply chain disruptions. [CNBC]