Intel CEO Patrick Gelsinger – a former chip designer who topped finance expert Bob Swan in February – announced plans to expand Intel’s manufacturing muscle this week.
Gelsinger wants to spend $ 20 billion on two new manufacturing facilities in Arizona. Gelsinger says the expanded capacity will take over the manufacture of third-party chip designers, in addition to Intel’s own CPUs – similar to the business model of TSMC, a Taiwan-based manufacturer that builds processors for many “non-factory” industry giants, including Apple, AMD and Qualcomm.
The move comes in sharp contrast to predictions by many analysts that Intel would dismember silicon manufacturing entirely. Intel had great difficulty in reducing its manufacturing process beyond 14 nm, increasing its ability to keep up with AMD – which has benefited greatly from TSMC’s successful process reduction to 7 nm. Since then, TSMC has added volume production for the 5 nm process, with an additional reduction to 3 nm expected later this year.
There is still a great demand for Intel chips, despite its difficulties with the reduction of processes. The global pandemic has created or exacerbated the scarcity of electronic products across the board, including CPUs and GPUs from all major players – and the increase in geodiversity in CPU manufacturing is highly attractive to distant countries and increasingly cautious about dependence on Asian factories.
Gelsinger says the new manufacturing capacity will be offered to Intel and other companies, taking a bite out of TSMC’s market. One of these third parties is SiFive, the RISC-V CPU designer. SiFive CEO Patrick Little announced a collaboration with Intel Foundry Services yesterday.
Gelsinger’s new direction for Intel manufacturing appears to include greater flexibility as well as greater capacity. He also announced a plan to license his x86_64 processor designs to third-party companies, which will be able to incorporate them into new chip designs for Intel to manufacture.
Intel hopes to secure additional manufacturing incentives over and above its initial $ 20 billion investment from the Biden administration and, potentially, other governments interested in increasing CPU manufacturing facilities outside the Asian region.