Intel Delays $200 Billion Decision on New Fab Sites

Intel has delayed its decision for its new multi-billion chip manufacturing sites in Europe and the U.S. until 2022. The delay will have little impact on an industry that cannot meet the demand for its products now, but it emphasizes the complexity of these decisions.

Intel hoped to announce the next locations in the United States and Europe early next year, which Reuters quotes chief executive Pat Gelsinger as saying at a press conference dedicated to a new chip packaging facility in Malaysia.   

When Intel announced its IDM 2.0 strategy early this year to increase the scale of its semiconductor manufacturing beyond its own products and become a competitive foundry player, Intel needed to build several new production facilities, including several brand-new sites in Europe and the U.S.

These sites, which will cost up to $200 billion, were meant to be unveiled by the end of 2021, but Intel delayed its decisions for unknown reasons and now plans to make the announcements in early 2022. 'Early 2022' is quite vague and could mean any date between January and April. 

This year Intel broke ground on two new semiconductor production facilities — Fab 52 and Fab 62 — at its Ocotillo camp near Chandler, Arizona. These fabs will cost around $20 billion and enhance the production capacity of an already existing site. But building additional fabs on a well-established site and establishing a brand-new site are two very different things. 

Intel admitted earlier this year that its brand-new small city-sized fab complex in the U.S. would cost $60 to $120 billion. The site will eventually host between six and eight fab modules that will make chips using its leading-edge nodes and package them using Intel's proprietary technologies like EMIB and Foveros. 

Intel's plans for European fabs look very similar. The company wants to establish a new site in mainland Europe, build a $20 billion fab there and then construct additional modules, increasing total investments to around $100 billion over time. 

Planning fab sites that will require $100 billion in funding over a decade is complex. Intel needs to build its new manufacturing facilities on land with access to communications and talent, which essentially means proximity to big cities. Furthermore, Intel is looking forward to getting subsidies and incentives from federal and local governments over many years, and fab modules and persuading authorities is hard.  

The brand-new large manufacturing sites are important for Intel and its foundry business as they will enable the company to scale its production capacities in TSMC's manner — relatively quickly and predictably. Yet, the amount of negotiations, considerations, preparations, and arrangements for such fab complexes is incredible, which likely factors into why Intel delayed the decisions and announcements until 2022.