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Intel to expand its chipmaking capacity with $20bn Arizona factories

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Intel CEO Pet Gelsinger has announced the company’s plans to step up its chipmaking capacity and offer foundry services, in a bid to rival industry leaders Samsung and TSMC.

Intel will spend up to $20bn to build two new factories in Arizona, US, based on its existing campus in Chandler, a suburb of Phoenix, Arizona. The facilities are expected to begin production in 2024 and will create 3,000 permanent jobs. Additional foundries will be built in the US and Europe, Intel said.

Intel is among a handful of companies that still designs and manufactures its chips; rivals such as Apple and Qualcomm rely on contract manufacturers.

Notably, the Arizona facilities will be used not only to manufacture its own chips, but also to manufacture chips for other companies, replicating TSMC’s semiconductor foundry model. Through Intel Foundry Services, other companies will gain access to its x86 computing cores and chips based on Arm architecture.

So far, Intel has been a minor player in the foundry business; only Taiwan’s TSMC and South Korea’s Samsung offer this service for the most sophisticated chipsets, centring chipmaking on East Asia where more than two-thirds of advanced chips are manufactured. However, companies such as Shanghai-based foundry SMIC – and now Intel – are busy playing catch-up. Intel will focus on directly competing with these industry leaders by manufacturing the most advanced chips.

Intel will still outsource to companies like TSMC where necessary or preferable for producing the highest-performance chips with the fastest turnaround.

Intel has reportedly secured several customers for the new factories. While their names cannot be disclosed, Gelsinger said during a pre-recorded webcast that Amazon, Cisco, Qualcomm and Microsoft support its efforts to offer chip manufacturing as a service. He said that Intel would pursue customers “like Apple”.

“We are absolutely committed to leading process technology capabilities at scale for the industry and for our customers,” Gelsinger said. Speaking to Reuters, he added that the company has fully resolved its problems with its most recent manufacturing technology and is “all systems go” on chipmaking for 2023.

Ireland will enjoy investment from Intel as it plans to add manufacturing capacity and 1,600 jobs to its Leixlip facility. Sites for additional US and European foundries will be chosen in 2022.

The announcement coincides with the initiation of an effort by the Joe Biden administration to shift supply chains for some critical technologies away from China and back towards the US, amid national security concerns.

“Intel’s investment will help to preserve US technology innovation and leadership, strengthen US economic and national security and protect and grow thousands of high-tech, high-wage American jobs,” US secretary of commerce Gina Raimondo said in a statement.

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