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    Home » Electronics and hardware » FABulous: Intel to spend $20-billion on new chip plants

    FABulous: Intel to spend $20-billion on new chip plants

    By Agency Staff24 March 2021
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    Intel will greatly expand its advanced chip manufacturing capacity as the new CEO announced plans to spend as much as US$20-billion to build two factories in Arizona and to open up its factories to outside customers.

    The move by CEO Pat Gelsinger on Tuesday aims to restore Intel’s reputation after manufacturing delays sent shares plunging last year. The strategy will directly challenge the two other companies in the world that can make the most advanced chips, Taiwan’s TSMC and Korea’s Samsung Electronics.

    And it will also aim to tilt a technological balance of power back to the US and Europe as government leaders on both continents have become concerned about the risks of a concentration of chip-making in Taiwan given tensions with China.

    Intel shares rose 6.3% after the company disclosed its new strategy and full-year financial guidance for 2021

    Intel shares rose 6.3% after the company disclosed its new strategy and full-year financial guidance for 2021. Some investors such as Third Point had previously urged Intel to consider spinning off its costly chip manufacturing operations.

    Intel said it expects $72-billion in revenue and adjusted earnings per share of $4.55, compared to analyst estimates of $72.9-billion and $4.77/share, according to Refinitiv data. The company said it expects $19-billion to $20-billion in capital expenditure.

    Gelsinger said that 2021 forecast “reflects the industry-wide shortage” of some components such as substrates.

    ‘Fully resolved’

    Intel is one of the few remaining semiconductor companies that both designs and manufactures its own chips. Rival chip designers such as Qualcomm and Apple rely on contract manufacturers.

    In an interview, Gelsinger said Intel has “fully resolved” its problems with its most recent manufacturing technology and is “all systems go” on chips for 2023. It now plans a massive manufacturing expansion.

    That will include spending $20-billion on two new factories at an existing campus in Chandler, Arizona, that will create 3 000 permanent jobs. Intel will then work on future sites in the US and in Europe, Gelsinger said.

    Intel CEO Pat Gelsinger

    Intel will use those factories to make its own chips but also open them to outside customers in what is called a “foundry” business model in the chip industry. Gelsinger said the new factories will focused on cutting-edge computing chip manufacturing, rather than the older or specialty technologies that some manufacturers such as GlobalFoundries specialise in.

    “We are absolutely committed to leading process technology capabilities at scale for the industry, and for our customers,” Gelsigner said, adding that Intel has lined up customers for the new factories but could not disclose their names.

    He did say on a webcast on Tuesday that Amazon.com, Cisco Systems, Qualcomm and Microsoft support its efforts to offer chip manufacturing services.

    Intel will aim to change that global balance by embracing the foundry business where it historically has been a minor player

    The move is a direct challenge to TSMC and Samsung. The two have come to dominate semiconductor manufacturing business, moving its centre of gravity from the US, where much of the technology was once invented, to Asia, where more than two-thirds of advanced chips are now manufactured.

    Gelsinger said Intel will aim to change that global balance by embracing the foundry business where it historically has been a minor player. Intel will offer chip customers the ability license its own technological crown jewels — known as the x86 instruction set architecture — as well as offer to build chips based on technology from ARM or the emerging open-source technology Risc-V, he said.

    “We will be picking our next sites within the next year for US and Europe,” he said.

    ‘Killer combination’

    Intel also announced plans for new research collaboration with IBM focused on computing chip and packaging technology.

    But even as Intel jumps into competition with TSMC and Samsung, it also plans to become a larger customer of theirs by turning to them to make subcomponents of its chips called “tiles” to make some chips more cost-effectively.

    “I’ll pick the best process technologies wherever they exist,” Gelsinger said. “I leverage internal and external supply chains. I’ll have the best cost structure. That combination of supply, products and costs, we think is a killer combination.”  — Reported by Stephen Nellis, (c) 2021 Reuters



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