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San Francisco, NFAPost: As part of its efforts to bolster US semiconductor leadership and help bring geographical balance to the global supply chain, Intel has begun work on two factories at the company’s Ocotillo campus in Chandler, Arizona, with a combined value of $20 billion.

The Fab 52 and Fab 62 plants will be the fifth and sixth at the site. They will be fitted with Intel’s latest technology, which the company hopes will enable it to make up ground on Taiwan Semiconductor Manufacturing (TSCM) in cutting-edge lithography.

In March, the company announced plans to build the two new leading-edge chip fabs at its Ocotillo campus in Chandler, Arizona. The new factories will support growing demand for Intel’s products and provide committed capacity for foundry customers.

Intel Chief Executive Pat Gelsinger

Intel Chief Executive Pat Gelsinger commented that the plan was intended to meet surging demand for semiconductors, which he described as “the foundational technology for the digitisation of everything”.

“We are ushering in a new era of innovation – for Intel, for Arizona and for the world. This $20bn expansion will bring our total investment in Arizona to more than $50bn since opening the site over 40 years ago. As the only US-based leading-edge chip-maker, we are committed to building on this long-term investment and helping the US regain semiconductor leadership,” said Pat Gelsinger.

He also added that Intel planned to announce another campus site in America before the end of the year, and that one would eventually hold eight production plants. The fabs will offer Intel’s most advanced process technologies, including the RibbonFET and PowerVia innovations in transistor architecture.

The plants will also host the Intel Foundry Services, an important element in the company’s turnaround plan. This will reserve capacity for customers such as Qualcomm and Amazon’s cloud computing business, as well as developing its manufacturing relationship with the US military. The plants are expected to be complete by 2024.

Intel Arizona Manufacturing plant

According to Intel, they will create more than 3,000 operational jobs as well as 3,000 construction positions. A joint study by the Semiconductor Industry Association and Boston Consulting Group, 75% of global capacity is concentrated in East Asia. At the same time, U.S. companies account for 48% of the world’s chip sales, but U.S.-based fabs account for only 12% of the world’s semiconductor manufacturing.

Companies benefit from a 25% to 50% cost advantage when establishing factories in Asia, primarily due to government incentives that have driven the current geographical imbalance. Without significantly incentivizing domestic investments in chip manufacturing, the U.S. and European semiconductor industrial base will continue to erode.

Intel is trying to build a more geographically diverse supply chain. Intel is making significant investments in manufacturing capacity, but more needs to be done by elected leaders to promote a robust U.S. chip manufacturing industry.

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