Intel to spend $20 billion on new chip plants

Intel to spend $20 billion on new chip plants

Intel to spend $20 billion on new chip plants

Intel has announced plans to significantly expand its advanced chip manufacturing capacity with the company’s new CEO, Pat Gelsinger, revealing plans to spend up to $20 billion on building two new factories in Arizona and opening up existing factories to outside customers

According to Gelsinger the move is intended to boost the company’s manufacturing capability but it will also help to shift the technological balance of power back to the United States and Europe. There has been growing concerns about the concentration of chipmaking in Taiwan, especially at a time of growing tensions with China.

The move is likely to be seen as a direct challenge to the likes of TSMC and Samsung. However, Sherman Shang, a research analyst at Fubon Securities Investment Services in Taipei, suggested that TSMC should be unaffected because its advanced technology would be,“difficult to match in any case”.

Shang went further and said that, “The Intel CEO is living in a previous era, and it’ll be quite hard for them to catch up on manufacturing.”

Gelsinger said that Intel expects revenues of $72 billion this year and plans to spend $19-20 billion on capital expenditures.

Intel is one of just a few companies that designs and manufactures its own chips, most others rely on contract manufacturers and this announcement suggests that it now plans a massive expansion of its manufacturing capabilities.

Intel is set to spend $20 billion on two new factories at an existing campus in Chandler, Arizona, and then plans to look at future sites both in the US and Europe.

Intel not only plans to make its own chips but will also open up its factories to outside customers employing a “foundry” business model. It will offer chip customers the ability to license out its x86 computing cores, as well as offer to build chips based on technology from the likes of Arm and RISC-V technology from startup SiFive.

Gelsinger said the new factories will focus on cutting-edge computing chip manufacturing, rather than the older or specialty technologies that some manufacturers such as GlobalFoundries tend to specialise in.

“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,” said Secretary of Commerce Gina Raimondo.