Intel Corporation (NASDAQ: INTC) plans to invest over $20bn in manufacturing plants around the U.S. This comes as a pump of fresh breath in the once U.S.-dominated chip industry, which has in recent years moved to Asia, where two-thirds of all advanced chips are made.
In the past couple of years, Intel has lost its lead position in the chip market and lagged behind its main competitors in chip manufacturing, Samsung Electronics Co Ltd and Taiwan’s Semiconductor Manufacturing Co Ltd. This has been occasioned by Intel’s slow upgrading of manufacturing technology, unlike earlier years when it came up with innovative ways to make chips each year.
The slow growth and failure to meet new production technology cost Intel its market share in the chips market to rivals like Qualcomm, Inc (NASDAQ: QCOM) and Advanced Micro Devices, Inc. (NASDAQ: AMD) rely on the foundry. Additionally, Intel lost some of its main chip clients, including Apple Inc (NASDAQ: AAPL) and Amazon.com, Inc. (NASDAQ: AMZN), to Samsung Electronics Ltd. Intel’s shares also took a deep plunge last year.
For this reason, Intel is planning to focus less on making their chips and start making chips for other companies. The irony, however, is that even with Intel’s plans to compete aggressively against Samsung and TSMC, it plans to buy some sub-components from the two companies for cost-effective manufacturing.
Working with other companies
The new Intel Chief Executive, Patrick P. Gelsinger, says that Intel will try to source sub-components from any available source, especially if available locally. Gelsinger says that Intel will be investing heavily in foundry to counter China’s huge strides in chip manufacturing and reinstate the U.S. and Europe in the global chip market.
Additionally, Intel is in talks with IBM (NYSE: IBM) over possible collaboration on research in chip and packaging technology. With the two tech giants’ experience and resources, the results will certainly shake up the industry.