Intel invests $20 billion into new factories, will produce chips for other companies

Intel has a new CEO, Pat Gelsinger, and hes not wasting any time to make some big changes. At the companys Engineering the Future announcement today, Gelsinger announced plans to outsource more of Intels chip production to third-party foundries; a $20 billion investment into two new fabs in Arizona; and a new branch of the company called Intel Foundry Services, which will see Intels foundries produce chips for other companies.

The announcements are part of a new IDM 2.0 strategy for Intels design and manufacturing, which is made up of three parts. First, theres Intels in-house manufacturing, which will continue to serve as a key part of Intels design and production of chips. Second, theres an expanded use of external foundries, including TSMC, Samsung, and GlobalFoundries, for production of products at the core of Intels computing offerings for both consumer and enterprise chips, starting in 2023.

And third, theres the newly announced Intel Foundry Services, which will see Intel open its gates to handle manufacturing of chips for other commercial customers, led by Randhir Thakur. Intel Foundry Services is a standalone foundry business unit, and it will develop x86, Arm, and RISC-V core chips for external clients using Intels manufacturing technology. And crucially for government work, Intels foundries will be located in the US and Europe, a benefit that competitors like TSMC dont have. Partners include IBM, Qualcomm, Microsoft, Google, and more.

The expansion of Intels manufacturing efforts which include a $20 billion investment into new fabs in Arizona that will expand Intels existing Ocotillo campus come at a critical time: the ongoing global semiconductor shortage means that demand for chips is at an all-time high. Adding Intels foundries (and its new Foundry Services business) could help open up new avenues for companies to source the chips that are essential for everything from new video game consoles to new pickup trucks. Gelsinger also teased that more foundries are in the works, promising additional announcements of expansions in the US, Europe, and elsewhere in the world later this year.

Intel also announced a new R&D collaboration with IBM focused on creating nextgeneration logic and packaging technologies. Details are slim at the moment, however.

Lastly, Intel announced plans to bring back a spiritual successor to its Intel Developer Forum conference with a new Intel Innovation event planned for October in San Francisco this fall as part of a new Intel On series of events.

Intel stands at a critical junction right now: the company faces increased competition from companies like AMD and Apples Arm-based M1 series of chips. At the same time, its seen major shifts in leadership and delays of generations of its chips, all while being outpaced by competitors like TSMC in terms of production techniques. Todays announcements represent Gelsingers first big moves to try to right the ship.

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