Intel to splash out $20bn on factories in new chipmaking push
Intel has unveiled plans to spend $20bn (£14.6bn) on two new semiconductor factories as part of a radical turnaround plan aimed at restoring the company’s chipmaking prowess.
Under a multi-year strategy outlined by new chief executive Pat Gelsinger, Intel will build two new plants in Arizona. It will also start outsourcing to other manufacturers and start making chips for other companies.
The overhaul marks Intel’s efforts to revamp its reputation after a series of manufacturing blunders last year caused it to lose the title of most valuable US chipmaker to rival Nvidia. It is also hoping to gain ground on Asian rivals such as TSMC and Samsung.
The plans signal a new direction for the US tech giant, which is one of the few remaining semiconductor firms that both designs and manufacturers its own chips.
Activist investor Third Point has previously pushed Intel to consider splitting off its chip design business and outsourcing manufacturing — a strategy employed by rivals such as Qualcomm and Nvidia.
But the new strategy signals new boss Gelsinger’s determination to maintain the company’s manufacturing capabilities, while also opening the door to partnerships.
Shares in Intel rose as much as seven per cent in after-hours trading as investors welcomed the move.
Gelsinger described the new plan — dubbed IDM 2.0 after its integrated device manufacturing model — as an “elegant strategy” and a “winning formula”.
“We are setting a course for a new era of innovation and product leadership at Intel,” he said. “Intel is the only company with the depth and breadth of software, silicon and platforms, packaging, and process with at-scale manufacturing customers can depend on for their next-generation innovations.”
It comes amid a global shortage in the chip industry that has taken its toll on the automotive industry.
Gelsinger said this was reflected in its 2021 forecasts of $72bn in revenue and adjusted earnings per share of $4.55, slightly behind analyst forecasts.