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Intel invests $ 3.5 billion in upgrading New Mexico, boosting chip production in the United States

Intel plans to spend $ 3.5 billion to upgrade its chip plant in Rio Rancho, New Mexico.

Intel plans to spend $ 3.5 billion to upgrade its chip plant in Rio Rancho, New Mexico.


Intel on Monday announced a $ 3.5 billion upgrade for a chip plant in Rio Rancho, New Mexico, that will strengthen processor stacking technology called Foveros. These costs, combined with $ 20 billion to build two new facilities in Arizona, are part of Intel’s major efforts to rejuvenate production.

On Sunday, the chipmaker confirmed the upgrade plan, first reported in 60 minutes to CBS, and said Monday that it would mean 700 new jobs on the site over the next three years. Intel production chief Keyvan Esfarjani described the plan in detail at a press conference with New Mexico Governor Michelle Lujan Grisham, New Mexico Senators Martin Heinrich and Ben Ray Luhan, and Representative Theresa Leger Fernandez, Intel said. The costs also mean 1,000 new jobs in construction, starting this year.

Intel has led the chipmaking process for decades, but in recent years has lagged behind Taiwan Semiconductor Manufacturing Co. Investing in new chip factories called Fabs is part of Intel’s big effort to restore its competitiveness new CEO Pat Gelsinger. The company also plans to build chips for others, a business called a foundry, and to rely on other chip foundries to build some of its own chips.

At the New Mexico plant, Intel will increase the use of processor packaging technology called Foveros that Intel debuted in 2018 and was first used in an efficient but an unusual chip codenamed Lakefield. Arranging individual elements of the chip on top of each other and connecting them to power distribution and communication links is technologically difficult, but Intel expects this to increase production flexibility. It can also be used to accommodate chip elements made in other chip foundries.

More investment in chip production, less stock repurchase

Intel is pleased with current political efforts to drum up federal funding to help the U.S. chip industry. Gelsinger said Intel would also invest more of its own money instead of spending it to buy its own shares, which makes shareholders happy but does not help with research or operations.

“We will not be as focused on redemption as in the past,” Gelsinger said in 60 minutes. “This was reviewed as part of my entry into the company, in consultation with the board of directors.”

Reassuring shareholders was important as Intel struggled, Moor Insights and Strategy analyst Patrick Moorhead tweeted Monday. “If they hadn’t bought it back, I think the company would have been broken,” Moorhead said. One of Intel’s widely recommended means of trouble is to separate its chip design business, which offers processors like its Core and Xeon models, from its chip business.

Strong competition from Intel

The Silicon Valley company remains profitable, but faces stiff competition on several fronts besides TSMC and the third major chip maker, Samsung. All smartphone processors are members of the Arm family, including Apple’s A-Series. Apple has also split with Intel for its new M Series Mac processors. Amazon, meanwhile, has an Arm server processor for its Amazon Web Services, the cloud computing foundation that drives huge chunks of the Internet.

Intel is also facing a smaller competitor to Arm called RISC-V, which has gained interest in some notable boot chips. One, Tenstorrent, has hired Jim Keller, a former well-known Intel chip designer, as CEO. Another, Esperanto Technologies, revealed the design of an AI chip with more than 1,000 processor cores.

As a sign of how serious Intel is in its foundry business, it will be able to build both Arm and RISC-V processors.

TSMC is also spending billions of dollars on its new plants, mostly in Taiwan, but also in Arizona. Gelsinger, however, is bullish: “We believe it will take us a few years and we will be caught up,” he said in 60 minutes.

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