Intel investing $3.5B in New Mexico fab upgrade, boosting US chipmaking

The plant will make processors using Intel's Foveros stacking technology. Along with $20 billion for two new Arizona fabs, it's part of CEO Pat Gelsinger's turnaround plan.

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

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


Intel on Monday announced a $3.5 billion upgrade to a chip manufacturing plant in Rio Rancho, New Mexico, that will boost a processor stacking technology called Foveros. That spending, combined with $20 billion to build two new facilities in Arizona, is part of a major effort by Intel to rejuvenate its manufacturing.

The chipmaker on Sunday confirmed the upgrade plan, first reported on CBS' 60 Minutes, and said Monday it'll mean 700 new jobs at the site over the next three years. Intel manufacturing chief Keyvan Esfarjani detailed the plan at a press conference with New Mexico Gov. Michelle Lujan Grisham, New Mexico's two senators, Martin Heinrich and Ben Ray Luján, and Rep. Teresa Leger Fernandez, Intel said. The spending also means 1,000 new construction jobs, with work starting this year.

Intel led chipmaking progress for decades but fell behind Taiwan Semiconductor Manufacturing Co. in recent years. Investing in its new chipmaking plants, called fabs, is part of a major Intel effort to restore its competitiveness under new CEO Pat Gelsinger. The company is also planning 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 fab, Intel will increase use of a processor packaging technology called Foveros that Intel debuted in 2018 and first used in an efficient but uncommon chip code-named Lakefield. Stacking separate chip elements atop one another and connecting them with power distribution and communication links is technologically difficult, but Intel expects it'll increase manufacturing flexibility. It also could be used to accommodate chip elements made at other chip foundries.

More chipmaking investment, less stock buybacks

Intel is happy with current political efforts to drum up federal funding to help the US chip industry. Gelsinger said Intel will invest more of its own money, too, instead of spending it on buying its own stock, which keeps shareholders happy but doesn't help research or operations.

"We will not be anywhere near as focused on buybacks going forward as we have in the past," Gelsinger told 60 Minutes. "That's been reviewed as part of my coming into the company, agreed upon with the board of directors."

Appeasing shareholders was important as Intel struggled, Moor Insights and Strategy analyst Patrick Moorhead tweeted Monday. "If they didn't do buybacks I think the company would have been broken up," Moorhead said. One widely suggested remedy for Intel's woes has been to split its chip design business, which comes up with processors like its Core and Xeon models, from its chip manufacturing business.

Intel's stiff competition

The Silicon Valley company remains profitable, but it faces stiff competition on several fronts besides TSMC and the third major chipmaker, Samsung . All smartphone processors are members of the Arm family, including Apple 's A series. Apple also has split from Intel for its new M series of Mac processors. Amazon, meanwhile, has an Arm server processor for its Amazon Web Services, the cloud computing foundation that powers huge swaths of the internet.

Intel also faces a smaller Arm rival called RISC-V that's won interest from some notable chip startups. One, Tenstorrent, hired Jim Keller, formerly a high-profile Intel chip designer, as chief executive. Another, Esperanto Technologies, has revealed an AI chip design with more than 1,000 processing cores.

In a sign of how serious Intel is about its foundry business, though, it'll be able to build both Arm and RISC-V processors.

TSMC is spending billions of dollars on its new fabs, too, mostly in Taiwan but also in Arizona. Gelsinger is bullish, though: "We believe it's going to take us a couple of years and we will be caught up," he told 60 Minutes.