Intel expands capacities for chip production – share closes in the red | 03/24/21


The chip giant Intel has announced the expansion of its production capacities amid the global shortage of semiconductors.

The group is building two factories in the US state of Arizona, as the new boss Pat Gelsinger announced. Intel also wants to increasingly produce chips for others as a contract manufacturer. An independent business unit was set up for this purpose. Its expansion will take “a few years”, said Gelsinger.

At the same time, Intel plans to involve contract manufacturers more closely in the production of its own processors in the near future. Gelsinger confirmed on Tuesday, however, that a large part of the Intel chips will continue to be manufactured in in-house factories. He made his first strategic decision to expand production. Investors, among others, had demanded that Intel should cut back on expensive manufacturing and instead rely more on contract manufacturers.

Because Intel, long the undisputed market leader in processors for personal computers, had recently come under pressure. On the one hand, there were setbacks with the introduction of Intel chips with structure widths of 7 nanometers. The smaller the structure widths, the more transistors fit on the same area and the more efficient the chips are. Leading contract manufacturers like TSMC already have the 7 nanometer process under control. Among others, the Intel competitor AMD (AMD (Advanced Micro Devices)) has benefited from this recently. Intel emphasizes that the problems with in-house production processes have now been resolved. The company’s 7-nanometer chips are expected to hit the market in 2023.

In addition, Apple is currently converting its Mac computers from Intel chips to processors developed in-house. They are based on the architecture of the chip designer Arm, which is also used on the iPhone and other smartphones. The first Macs with the in-house M1 chips were praised, among other things, for longer battery life.

Intel recently countered the positive reaction to the Apple chips with a TV ad campaign aimed at highlighting the advantages of its processors – and hired actor Justin Long, who once advertised Macs, to do so. Gelsinger now emphasized that Intel would also offer itself as a contract manufacturer for Apple.

Intel is already making production capacities available for others – however, the business has so far been mainly focused on chips based on Intel technologies. Now the group wants to support various chip platforms and is thus attacking manufacturers like TSMC and Samsung.

For the two new factories in Arizona alone, investments are expected to amount to around 20 billion dollars (currently around 16.9 billion euros). The production there should begin in 2024, wrote the “Wall Street Journal”. In the next few months, the expansion of capacities in Europe should also be announced, said Gelsinger. Intel already has a large location in Ireland.

The semiconductor bottlenecks after the surge in demand, for example for laptops in the Corona crisis, recently became a problem for the automotive industry, among others. Missing components caused production interruptions for several manufacturers. For the USA, building capacities in chip production in its own country is also a priority in view of the presidency Donald Trump escalated trade conflict with China. Investors let the Intel share rise temporarily by a good three percent after the announcements in the pre-market trading on Wednesday./so/DP/fba

In NASDAQ trading, Intel shares were down 2.27 percent to $ 62.04 by the end of trading.


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Intel expands capacities chip production share closes red


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