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Intel today announced it will spend $3.5 billion to upgrade its factory in New Mexico as part of a plan to expand domestic manufacturing investments.
Intel CEO Pat Gelsinger, who took over as CEO on February 15, appeared in a 60 Minutes segment that included the announcement. More information will be released on Monday.
Intel is also planning to spend $10 billion on a new factory in Israel and has already said it will spend $20 billion to build two new factories in Arizona. Gelsinger noted in the 60 Minutes interview that the U.S. had about 37% of the worldwide chip production about 25 years ago, but that percentage has sunk to 12% today. And while there were once 25 major companies making leading-edge chips based on the best manufacturing processes, today only three are doing so: Intel, Taiwan’s TSMC, and Samsung.
60 Minutes also interviewed TSMC CEO Mark Liu, who responded to Intel’s investments with a pledge to spend $100 billion on chip research and manufacturing. This includes a new U.S. factory in Phoenix, Arizona, where Intel’s efforts have been concentrated. Both companies are responding to a worldwide shortage of chips, which are used in everything electronic. The global shortage of semiconductors can be traced to heightened demand for electronics during the pandemic; the voracious appetite of countries such as China; and a lack of investment in chip factories, which can cost at least $10 billion.
U.S. President Joseph Biden has pledged to provide $50 billion in support for the country’s chip industry as part of an effort to make the industry more competitive. This has raised some concerns, as much of that money will go toward helping companies like Intel, which had $78 billion in revenues last year and doesn’t necessarily need government help. But Gelsinger pointed to the semiconductor investments Asian countries have made and their overwhelming 74% share of global production.
He said the chip industry is critical and that more of it should be on American soil. He also acknowledged that Intel had stumbled in both chip design and manufacturing and that it may take a couple of years for the company to catch up to rivals. And he noted that Intel’s board decided to spend less money on stock buybacks as part of its decision to bring back Gelsinger, who spent decades working at Intel, as the CEO.
On Monday morning, Intel provided additional information. The company said the New Mexico factory in Rio Rancho will be upgraded to handle Foveros, Intel’s advanced 3D packaging technology.
The multi-year investment is expected to generate 700 tech jobs, 1,000 construction jobs, and an additional 3,500 jobs in the state. Planning has begun and construction is expected to start in late 2021.
Keyvan Esfarjani, senior vice president of Intel, said in a statement that other companies are interested in using the Foveros technology as part of the Intel Foundry Services business, which will provide chip production for other companies.
The Foveros tech enables Intel to build processors with vertically stacked functions, rather than side-by-side, providing greater performance in a smaller space.
Intel has invested $16.3 billion in the New Mexico factory since 1980. Its annual economic impact in the state is $1.2 billion. The company purchases renewable energy for the factory’s electrical system.
[Updated 9 a.m. Pacific time on 5/3/21 with additional info on the New Mexico factory.]
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