Intel announced the Tuesday that he plans to spend $ 20 billion to build new chip manufacturing plants. The move is meant to show that the company and the United States are determined to regain global leadership in a critical technology. But it also shows how far behind Intel and the United States are.
As part of his plan, Intel said it would open its factories more widely to manufacture chips for other companies, underscoring its manufacturing expertise and ambition. But at the same time, Intel said it would outsource the production of some of its more advanced chips to Taiwan Semiconductor Manufacturing Company. TSMC is ahead of Intel in using Extreme Ultraviolet Lithography (EUV) to put more computing power on a chip by bringing transistors closer together.
“It is good news for the United States that Intel is doubling its manufacturing operations,” says Saif Khan, researcher at Georgetown University Center for Security and Emerging Technologies. “Chip manufacturing is a key source of US economic competitiveness and is also very important to national security.”
Khan, who studies the policy implications of chipmaking, says the concentration of chip production in Taiwan and South Korea over the past decade poses a risk to the United States and other economies. Supply shocks and geopolitical conflicts can cripple entire sectors of industry. “The situation looks a little scary,” he said.
The Semiconductor Industry Association, an American industrial group, said in september that 75% of chips are now made in Asia. The United States’ share of global chip manufacturing, which was 37% in 1990, has fallen to 12%. Intel and the US government want to get some of that back.
CEO of Intel, Pat gelsinger, said on Tuesday that the company would spend $ 20 billion to build new chip manufacturing plants in Arizona, bolster its chip manufacturing unit for other companies and collaborate with IBM in researching new chip technologies.
Gelsinger also confirmed rumors that Intel would outsource some manufacturing to TSMC, but said the company would keep most chipmakers in-house.
Manufacturing modern microchips is an incredible feat of engineering, with functionality reduced to just a few billionths of a meter in size, increasing the efficiency and computing power of new designs.
Intel currently manufactures chips with a size of 10 nanometers. TSMC manufactures chips using 7 and 5 nanometer processes; by the time Intel is up to the task with manufacturing 7 nanometers, TSMC says it will be at 3 nanometers.
“It’s a pretty deep hole for Intel,” says Linley Gwennap, president of the Linley group, a company of chip industry analysts. “And it’s not just about throwing money at the problem.”
For Intel to regain a stronger position in chipmaking, according to Gwennap, execution will be essential and the company will have to do more to regain its technological lead. He says the plan to collaborate with IBM on researching new chip designs and component packaging methods could prove to be the most important part of yesterday’s announcement. IBM has several research groups working on new approaches to the design and manufacture of microprocessors.
“I think this should help Intel better innovate in next-generation technology,” he says. “And that’s really what Intel needs.”
Ten years ago, Intel was at the top of the chipmaking world. But the company didn’t anticipate the critical changes in IT, from desktops to smartphones, and from general purpose chips to specialized chips for artificial intelligence. Intel also made crucial calculation errors in manufacturing, delaying the use of UVU and leaving its latest products several years behind more advanced ones.
As Intel stumbled, other companies such as Arms, which designs mobile chips, and Nvidia, which sells specialized AI and graphics chips, has grown. Nvidia has announced its intention to acquire Arm. Intel’s manufacturing errors and the rise of custom chips have also coincided with a shift in chip manufacturing to Asia, where Samsung and TSMC now manufacture many of the most advanced chips in the world. Other Asian foundries like UMC in Taiwan and SMIC in China manufacture less advanced chips.