&On Tuesday, March 23, Intel announced that it will spend $20 billion to build two new chip manufacturing plants in Arizona. Intel shares rose 5% in extended trading on Tuesday.
The announcement coincides with the first public speech made by new CEO pat Gelsinger since he took office, indicating that Intel will continue to focus on manufacturing, while the industry transformation has led competitors to separate chip design from chip manufacturing.
Intel opens new factory to deal with chip shortage
At present, there is a global shortage of chips, and industries from automobiles to electronics are seriously troubled. People worry that the United States is lagging behind in semiconductor manufacturing.
“Intel is and will be a leading developer of process technologies, a major manufacturer of semiconductors and a leading global supplier of silicon,” Gelsinger said
Intel also said that as a ‘foundry’ or manufacturing partner of other chip companies focusing on semiconductor design, there is always a need for a company to actually produce chips in the market. Intel said its foundry subsidiary will be known as Intel foundry services and will be led by randil takur, Intel’s current senior vice president.
Intel CEO pat Gelsinger
By 2025, foundry companies will compete in a $100 billion market and produce a range of chips, including those based on ARM technology, which are used in mobile devices and have always competed with Intel’s favorite x86 technology, gersingh said.
Intel said its chip manufacturing services are in great demand, especially for large US technology companies. Amazon, Cisco, Google, IBM and Qualcomm are enthusiastic about their foundry services, the company said. Microsoft CEO Satya NADELLA appeared in Gelsinger’s speech to show support for Intel’s move.
Intel’s commitment to manufacturing has implications for us national security. Intel said it is building a partnership with IBM to improve chip logic and packaging technology, which will ‘enhance the competitiveness of the U.S. semiconductor industry and support key U.S. government initiatives’.
Intel currently operates four Fabs in the United States. In addition to the expansion in Arizona, it has plants in Massachusetts, New Mexico and Oregon. Intel also makes chips in Ireland and Israel, and has a factory in China.
Intel’s foundry will provide Asian chip factories with alternatives from the United States and Europe.
Chip giant Intel is making a comeback
In February, US President Biden said that US semiconductor manufacturing is a priority for his government. His government wants to address the current shortage of chips and address legislators’ concerns that outsourcing chip manufacturing makes the us more vulnerable to supply chain disruptions.
In an administrative move, Biden began a 100 day review to boost US chip companies with government support and new policies.
In response to the executive order at that time, Intel said: “today’s executive order, together with the full funding of chips act, will help to establish a level playing field in the competition for global semiconductor manufacturing leadership, and enable us companies to compete on an equal footing with foreign companies that are heavily subsidized by the government.”
On February 15, Gelsinger took over Intel from former CEO Bob swan. Although he was previously the CEO of VMware, he started his career at Intel and his appointment was seen as a return home.
He took over a company that faced all kinds of challenges. Intel has lost to its Asian rivals in semiconductor manufacturing, especially TSMC in China. Intel’s most advanced chips are made in 14nm or 10nm processes.
Intel designs its own chips and makes them in its own factories. But competitors like AMD, including Intel customers like apple, only design processors, which are then manufactured by external chip factories. These chip factories, such as TSMC and Samsung, use more advanced 5-nanometer technology, and more transistors can adapt to chips of the same size to improve power and efficiency.
“We’re going to pursue customers like apple,” Gelsinger said, casting a new business for Intel.
Gelsinger said his 7-nanometer chip is expected to reach a milestone in the second quarter and plans to produce most of its products on its own. However, Intel will increase its use of third-party manufacturers, including TSMC, Samsung and global foundations, he said.
Intel also announced its annual guide. The company said it expects adjusted earnings per share of $455, or $72bn, lower than reciitiv’s estimated adjusted earnings per share of $477 and revenue of $72.94bn. Intel said it expects capital spending to be $19 billion to $20 billion this year.
China software network believes that the US chip manufacturing giant Intel is making a comeback. Contrary to some industry expectations, Intel has not changed its decades old strategy, insisting on both chip design and manufacturing, and becoming a competitive chip manufacturing company. Intel expects to double its performance in chip manufacturing.
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