Intel CEO plans to build two new CPU fabs in Arizona

The new fabrication plants will likely be somewhere near the company's existing campus in Chandler, Arizona.
Enlarge / The new fabrication plants will likely be somewhere near the company’s existing campus in Chandler, Arizona.

Intel CEO Patrick Gelsinger—a former chip designer who took the top slot from finance specialist Bob Swan this February—announced plans to expand Intel’s manufacturing muscle this week.

Gelsinger wants to spend $20 billion on two new fabrication facilities in Arizona. Gelsinger says the expanded capacity will take on manufacturing for third-party chip designers in addition to Intel’s own CPUs—similar to the business model of TSMC, the Taiwan-based fabricator that builds processors for many “fabless” industry giants, including Apple, AMD, and Qualcomm.

The move comes in sharp contrast to many analysts’ predictions that Intel would spin off silicon fabrication entirely. Intel has had great difficulty shrinking its manufacturing process beyond 14 nm, adding to its difficulties keeping up with AMD—which has benefited greatly from TSMC’s successful process shrink to 7 nm.  Since then, TSMC has added volume production for 5 nm process, with a further shrink to 3 nm expected later this year.

There’s still high demand for Intel’s chips, despite its struggles with process shrink. The global pandemic has created or exacerbated shortages in electronics across the board, including CPUs and GPUs from all major players—and increased geodiversity in CPU manufacturing is highly attractive to countries distant from and increasingly wary of dependence on Asian factories.

Gelsinger says the new fabrication capacity will be offered to Intel and other companies, taking a bite out of TSMC’s market. One such third party is SiFive, the designer of RISC-V CPUs. SiFive CEO Patrick Little announced a collaboration with Intel Foundry Services yesterday.

Gelsinger’s new direction for Intel fabrication appears to include greater flexibility as well as higher capacity. He also announced a plan to license its x86_64 processor designs to third-party companies, who will be able to incorporate them into new chip designs for Intel to manufacture.

Intel hopes to secure additional manufacturing incentives above and beyond its $20 billion initial investment from the Biden administration, and potentially from other governments interested in increased CPU fabrication facilities outside the Asian region.