Intel announced on Monday that it plans to invest $3.5 billion to upgrade a New Mexico chip manufacturing plant. The upgrade, combined with a further $20 billion to build two new facilities in Arizona, form part of a major plan to rejuvenate Intel manufacturing.
The chipmaker confirmed a report from 60 Minutes that there were plans to upgrade the facility. Intel is happy with political efforts to generate federal funding to bolster the US chip industry. New Intel CEO Pat Gelsinger said that Intel is also happy to invest more of its own money rather than investing it in Intel stock. This move is sure to please investors but doesn’t help with research and operations.
Appeasing shareholders is important given how Intel has struggled lately. One suggestion for Intel is to split up the chip design business, which comes up with new processors, with the manufacturing business to create two separate companies.
Intel was the number one choice for chipmaking for decades but recently fell behind Taiwan Semiconductor Manufacturing Company. Investing in these new fab chipmaking plants is part of a major effort to restore Intel to its former glory under Gelsinger. The company also plans to build chips for others, known as a foundry, and rely on other chipmaker foundries to build its chips.
Intel is still profitable, but faces stiff competition from Samsung and TSMC. Phone manufacturers are also starting to create chips in-house, adding to Intel’s woes.