Intel steps into semiconductor market; invests $20bn in US chip factories

By Ashika Rajan, Trainee Reporter
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American multinational corporation and tech company Intel stated that it will spend up to $20 billion to build two factories in Arizona, USA and open them to outside customers.

Intel’s move led by its Chief Executive Officer Mr. Pat Gelsinger aims to restore the company’s reputation after manufacturing setbacks sent shares plunging last year. The approach will directly compete with Taiwan’s Semiconductor Manufacturing Co (TSMC) and South Korea’s Samsung Electronics, the two other companies in the world capable of producing the most advanced chips.

It will also seek to shift the technical balance of power back to the US and Europe, as government officials on both continents have become concerned about the dangers of chipmaking concentration in Taiwan due to tensions with China.

After the company disclosed its new strategy and full-year financial guidance for 2021, Intel’s stock jumped 7.5 percent. Intel had previously been encouraged by some investors, such as US-based Third Point, to consider spinning off its expensive chip manufacturing operations.

According to Refinitiv data, Intel expects $72 billion in revenue and adjusted earnings per share of $4.55, compared to analyst forecasts of $72.9 billion and $4.77 per share. The company said that capital spending is expected to cost $19 billion to $20 billion. Intel is one of the few semiconductor companies still designing and manufacturing its chips. Contract manufacturers are used by rival chip designers like Qualcomm and Apple.

Mr. Gelsinger remarked that Intel has “fully resolved” its problems with its most recent manufacturing technology and is “all systems go” on chips for 2023. It also intends to expand its manufacturing capacity significantly.

This will include a $20 billion investment in two new factories on an existing campus in Chandler, Arizona, which will result in the creation of 3,000 permanent jobs. After that, Intel will work on future sites in the US and Europe.

In what is known as a “foundry” business model in the chip industry, Intel will use those facilities to produce its chips while also making them available to outside customers.

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