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Semiconductors

Intel breaks ground on $20bn Arizona chip plants in battle with TSMC

U.S. fabs will add capacity in bid to lure customers from Taiwanese rival

Intel's Chandler, Arizona, campus will house a total of six fabs once the two new chip pants become fully operational in 2024. (Photo courtesy of Intel) 

PALO ALTO, U.S. -- Intel broke ground Friday on two chip plants in the U.S. state of Arizona as it steps up competition with Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker, while Washington pushes for a stronger American semiconductor industry.

The new factories, to be named Fab 52 and Fab 62, will add to the U.S. chipmaker's existing facilities in its Chandler, Arizona, campus, which will house a total of six fabs.

The company will spend $20 billion, bringing its total investment in Arizona to more than $50 billion since it started manufacturing in the state 40 years ago, according to CEO Pat Gelsinger.

Intel's announcements came as the Biden administration looks to build up the domestic chip supply chain to counter China's own goal of semiconductor self-reliance. The global chip shortage plaguing automakers and electronics brands adds urgency to the effort.

"We face a global shortage that is causing chips to halt and slow the production of many other areas of the economy, and we are doing our part," Gelsinger said Friday. "Today's announcement is part of closing that gap."

The groundbreaking ceremony was held a day after the Intel CEO attended a virtual White House meeting on the chip shortage, along with executives from TSMC, Samsung Electronics, Apple and several American automakers. The meeting followed the chip summit held at the White House in April, when President Joe Biden said the U.S. goal is to lead the world again in the semiconductor sector.

"As the only U.S.-based, leading-edge chipmaker, we are committed to building on this long-term investment and helping the United States regain semiconductor leadership," Gelsinger said.

The two new Arizona fabs, which are slated to become fully operational in 2024, will not only support manufacturing of Intel's in-house products but will also serve outside customers. The U.S. chipmaker's entry into the foundry business, where TSMC leads the market, marks a major strategic shift for a company that for decades has reserved most of its production capacity for its own use.

Intel's two new fabs in Arizona will compete directly with TSMC, which started construction of its $12 billion plant in the state in June. The Phoenix, Arizona, chipmaking plant will be TSMC's first factory in the U.S. in two decades.

Intel said this year that it will use the expanded manufacturing capacity in the U.S. to win over clients such as Apple and Qualcomm, two top TSMC customers.

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