Intel’s new chief executive is doubling down on chip manufacturing in the United States and Europe, a surprise bet that could please government officials worried about component shortages and dependence on factories in Asia.
Patrick Gelsinger, who took the top job in February, said on Tuesday that he planned to spend $20 billion on two new factories near existing facilities in Arizona. He also vowed that Intel would become a major manufacturer of chips for other companies, in addition to producing the processors that it has long designed and sold.
Intel had stumbled in developing new production processes that improve chip performance by packing more tiny transistors on each piece of silicon. The lead in that costly miniaturization race had shifted to Taiwan Semiconductor Manufacturing Company, or TSMC, and Samsung Electronics, whose so-called foundry services make chips for companies that include Apple, Amazon, Nvidia and Advanced Micro Devices.
Some investors and analysts had pushed for Intel to spin off or discontinue manufacturing in favor of external foundries, an approach taken by most other chip companies to increase profits.
But a pandemic-fueled shortage of semiconductors for cars, appliances and other products has underscored the vital role of chip factories in supporting many sectors of the economy. And before the recent concerns, worries about the Asian foundries’ proximity to China had already prompted Congress and several branches of the Trump and Biden administrations to back plans to encourage more domestic chip manufacturing, though funding had not yet been appropriated.
Officials in Europe have also floated proposals for new factories to reduce reliance on foreign-made chips.