• United States

Intel’s $20 billion bet on advanced fabrication

News Analysis
Mar 30, 20213 mins
Technology Industry

Intel CEO Pat Gelsinger is going forward with Intel's chip-foundry business, with plans later this year to announce its expansion in the US and Europe.

No one ever said Pat Gelsinger was timid. A month into his stint as Intel’s CEO, he has announced an ambitious plan to drive ahead with Intel’s chip-manufacturing efforts rather than give up on it.

Naysayers and pundits had been saying Intel should dump its fabrication business, similar to what AMD did more than a decade ago when it spun out its fabs into what became GlobalFoundries. Intel’s fabs had fallen behind the bleeding edge, and while the TSMC foundry was making 7nm chips for AMD, Intel was struggling to get to 10nm.

Well bleep that, said Gelsinger (OK, maybe not). Rather than spin off the foundry business, Intel is setting it up as a separate unit within the company called Intel Foundry Services with its own profit and loss statements like the other Intel divisions. So in addition to making Intel chips, Intel Foundry Services will make chips for other semiconductor companies.

Intel is kicking things off with a $20 billion investment in two separate chip fabs at its facility in Chandler, AZ, featuring cutting-edge lithography gear. This is where its long-delayed 10-nanometer manufacturing processes are finally in operation after years of delays and not far from where TSMC is expected to open a fab.

Arizona is very popular with chip makers for a reason beyond the plentiful, cheap land. Arizona is the site of 113 quartz mines, by far the largest number in the US. Semiconductor-grade silicon is usually made of quartz, not sand, which, while it contains silicon dioxide, has higher impurities.

Intel is not stopping there. Gelsinger said that the company would be expanding foundry capacity elsewhere in the United States and in Europe, and would be making announcements about when and where before the end of the year.

Intel Foundry Services will be led by veteran executive Randhir Thakur, who is currently in charge of Intel’s supply-chain operations. He has also done stints at semiconductor manufacturing equipment maker Applied Materials as well as SanDisk.

A number of American chip makers have pleaded with the Biden administration for subsidies to build factories in America. While there are some fabs beyond Intel, it’s nothing compared to Taiwan and South Korea, and neither region is known for political stability.

Gelsinger did say in a statement that Intel would get help from the feds and the state of Arizona for its foundries. “We are excited to be partnering with the state of Arizona and the Biden administration on incentives that spur this type of domestic investment,” he said.

The Arizona foundries will come online around 2024. If Intel executes on the plan it should alleviate the burden on Samsung and TSMC, but who knows what the landscape will look like in three years?

Andy Patrizio is a freelance journalist based in southern California who has covered the computer industry for 20 years and has built every x86 PC he’s ever owned, laptops not included.

The opinions expressed in this blog are those of the author and do not necessarily represent those of ITworld, Network World, its parent, subsidiary or affiliated companies.