Intel Reenters Foundry Market with 22 Trillion Investment... Two New Semiconductor Factories Established (Comprehensive)

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[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Suhwan] U.S. semiconductor company Intel is entering the foundry business (Foundry: semiconductor contract manufacturing). It plans to invest $20 billion (approximately 22 trillion KRW) in building new semiconductor factories and significantly enhance semiconductor production capacity through cooperation with other companies.

On the 23rd (local time), Intel's CEO Pat Gelsinger announced Intel's new integrated device manufacturer (IDM) model, IDM 2.0, during a virtual briefing titled "Intel Unleashed: Engineering the Future," stating that Intel will expand investment in semiconductor facilities and officially launch its foundry business. CEO Gelsinger said, "Innovation to open a new era for Intel has begun," adding, "Intel is the only company with software, semiconductors and platforms, packaging, and manufacturing processes that customers can trust."

Accordingly, Intel will build two new semiconductor factories in Arizona, USA, investing at least $20 billion for this purpose. The newly established semiconductor factories will be used to produce self-designed semiconductor chips. CEO Gelsinger said, "We expect the new factories to meet customer demand," and added, "We will announce additional factory construction plans for the U.S. and overseas regions within this year."

Utilizing this expanded production capacity, Intel will also start its foundry business, producing Intel’s own x86 architecture chips as well as ARM chips used in smartphones and other mobile devices. This marks Intel’s re-entry into the foundry business, which it had effectively abandoned in the past.

With global foundry sector sales expected to surpass $100 billion by 2025, Intel aims to boost its growth potential through its foundry entry. CEO Gelsinger stated, "We plan to attract major U.S. IT companies such as Apple as our foundry customers," and added, "We will become the most competitive U.S. foundry company serving customers worldwide."

Intel’s foundry business entry comes amid a worsening global semiconductor supply shortage. The semiconductor shortage has adversely affected the U.S. automotive industry, raising the need for domestic semiconductor production by U.S. companies.

In particular, since Asian companies dominate the foundry sector, concerns have been raised about relying on foreign countries for semiconductor production, a key national industry. According to semiconductor market research firm TrendForce, last year, the top three foundry market shares were held by Samsung and Taiwan’s TSMC and UMC, accounting for 78% of the total market.

On the other hand, the share of semiconductor production by U.S. companies is relatively lower compared to Asian companies. According to the Semiconductor Industry Association (SIA), 48% of global semiconductor sales demand currently comes from U.S. companies, but semiconductor production within the U.S. accounts for only 12% of total global production. Specifically, semiconductor production by U.S.-owned companies accounted for 9% of total global production.

In response, U.S. President Joe Biden issued an executive order at the end of last month to review the domestic semiconductor supply chain and provide necessary government support to ensure smooth semiconductor supply. This is seen as an effort to reduce overseas dependence on semiconductor production and enhance the production capacity of U.S. companies. Additionally, earlier this year, the U.S. Congress passed the so-called CHIPS Act, a semiconductor industry support bill that provides up to $3 billion per project for facility investments in domestic semiconductor production.

Intel’s re-entry into the foundry business is interpreted as a strong commitment to significantly enhance its semiconductor self-production capacity in this context. CNBC analyzed, "As the global semiconductor shortage continues, the need for domestic semiconductor production in the U.S. has been raised," adding, "Intel could emerge as an alternative in the foundry sector, which is monopolized by Asia."

Intel also plans to significantly improve its semiconductor process technology as part of the IDM 2.0 plan announced on this day. Currently, Intel’s semiconductor process technology remains at 14nm. Due to the limitation of only being able to design and produce 14nm semiconductor chips, Intel has been criticized for producing relatively outdated technology chips compared to competitors AMD and Nvidia, which are designing 7nm semiconductors. Especially, Intel’s core product, the CPU, has seen accelerated competition with AMD, with Intel’s CPU market share dropping from 76.9% in 2019 to 61.4% last year.

Accordingly, Intel plans to complete the development of 7nm process technology within this year. CEO Gelsinger said, "The development of 7nm technology will be nearly completed within this year," adding, "It will be applied starting with the Meteor Lake consumer CPU lineup scheduled for release in 2023."

Furthermore, Intel announced it will collaborate with the technology ecosystem and industry partners. It plans to pursue research cooperation with IBM for next-generation logic and packaging technology development. CEO Gelsinger said, "Collaboration with IBM will accelerate the pace of technological innovation," adding, "The synergy effect between the most innovative semiconductor companies will be substantial."

Pat Gelsinger, Intel Chief Executive Officer (CEO)
[Image source=Reuters News Agency]

This content was produced with the assistance of AI translation services.