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Intel to Spend $20 Billion on Two New US Chip Plants

March 24, 2021
The announcement comes as U.S. automakers struggle to source semiconductors for vehicle production.

Intel Corp. is making major plays in the field of semiconductor manufacturing. The Santa Clara, California-based technology and electronics company announced it would spent $20 billion on two new semiconductor factories in Chandler, Arizona. The plants are expected to employ 3,000 people in high-tech manufacturing jobs.

In addition, Intel will form a standalone semiconductor manufacturing business, Intel Foundry Services, in order to serve growing global demand for computer chips, with plans for more semiconductor factories elsewhere in the U.S. and Europe.

The new standalone business will help Intel challenge rival chip manufacturers around the world like Samsung Semiconductors of South Korea and TSMC of Taiwan, which currently produce many of the computer chips used in electronic products from cell phones and laptops to electric vehicles and refrigerators.

Intel CEO Pat Gelsinger made the announcements during a webcast on March 23 outlining what Gelsinger called “IDM 2.0,” a broad plan for Intel to significantly increase its integrated device manufacturing (IDM) operations.

The new Arizona factories, Gelsinger says, will create about 3,000 permanent “high-tech, high-wage” jobs, as well as 15,000 new local long-term jobs in the state and 3,000 temporary construction jobs. In a statement, Arizona Governor Doug Ducey said Intel’s decision to build there “proves once again that Arizona is at the cutting-edge of advanced chipmaking and manufacturing.”

According to Pat Gelsinger, the $20 billion plants will produce Intel’s “first large-scale foundry operation,” and he has plans to pick more sites for foundries in the U.S. and Europe.

Semiconductor foundries, like those operated by TSMC and U.S.-based Globalfoundries, typically produce chips designed by outside customers, like Qualcomm Inc. or Apple Inc., which don’t have chip production facilities of their own. Intel already designs and produces its own chips, but its new foundry business will allow other companies to leverage Intel’s production lines and proprietary chip construction techniques.

Intel Foundry Services will be led by Intel’s senior vice president, Dr. Randhir Thakur, who will report directly to Gelsinger.

The move to enter the semiconductor foundry field comes at an opportune time for Intel. General Motors Co., Ford Motor Co., and Honda North America, among other automakers, have run into vehicle production bottlenecks caused by a shortage of semiconductors. That shortage, in part, has been driven by an increased demand for computer electronics during the very pandemic that crushed vehicle production in the spring of 2020 that automakers are currently trying to recover from. 

On February 24, after meeting with a bipartisan group of senators, President Biden signed an executive order directing members of the Cabinet to review supply chains for essential goods commonly produced internationally, including semiconductors.  

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