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Pat Gelsinger opens up Intel’s checkbook for IDM 2.0

$20 billion investment to take back first place

Posted: By Jon Peddie 03.24.21

In office 37 days and Dr. Gelsinger showed what “hit the ground running” means by announcing his “Integrated Device Manufacturing 2.0” plan.

Over the last five or so years, Intel built almost everything in-house; now it wants the capability to be more flexible so that the work can be done in more locations. That includes collaborating with third-party foundries to build some products, or some parts of a product.

Gelsinger said this plan is both a big change and business as usual. “Complementary and strategic use of third-party foundries is an underappreciated fact” at Intel.

IDM 2.0 strategy for Intel’s design and manufacturing, which is made up of three parts. First, there’s Intel’s in-house manufacturing, which will continue to serve as a key part of Intel’s design and production of chips.

Second, there’s expanded use of external foundries for both consumer and enterprise chips. The partner foundries include: TSMC, Samsung, and GlobalFoundries. Starting in 2023, they’ll be producing “products at the core of Intel’s computing offerings” for both consumer and enterprise chips. 

Dr. Randhir Thakur is senior vice president and the president of Intel Foundry Services, reports to Gelsinger

And third, there’s the newly announced Intel Foundry Services, which will see Intel offer manufacturing services to commercial customers. 

Intel Foundry Services is a “standalone foundry business unit,” and it will develop x86, Arm, and RISC-V core chips for external clients using Intel’s manufacturing technology. Crucially, Intel is looking for government work (e.g., DARPA). Intel’s foundries will be located in the US and Europe, a benefit that competitors like TSMC don’t have. Partners include IBM, Qualcomm, Microsoft, Google, and more. Intel also announced a new R&D collaboration with IBM “focused on creating next–generation logic and packaging technologies.”

To accelerate Intel’s IDM 2.0 strategy, Gelsinger announced a significant expansion of Intel’s manufacturing capacity, beginning with plans for two new fabs in Arizona, located at the company’s Ocotillo campus. These fabs will support the increasing requirements of Intel’s current products and customers, as well as provide committed capacity for foundry customers. 

The build-out represents an investment of approximately $20 billion, which is expected to create over 3,000 permanent high-tech, high-wage jobs; over 3,000 construction jobs; and approximately 15,000 local long-term jobs in the U.S.

Spreading the wealth. Intel also plans to expand its advanced chip manufacturing capacity outside the U.S. and will add 1,600 jobs at its Irish plant, one of the largest ever single job announcements by a multinational company in Ireland. A $7 billion investment in Ireland and Europe will more than double its available manufacturing space there.

AND, IDF is back—re-named, but back! Intel is bringing back the spirit of its popular Intel Developer Forum event this year with the launch of Intel On, a new industry event series. Gelsinger encouraged technology lovers to join him at this year’s Intel Innovation event planned for October in San Francisco.

Gelsinger’s announcement comes amid explosive growth in demand for chips, which caused consumer electronics makers, industrial control builders, and global automakers to halt production of vehicles due to short supplies of chips.

What do we think?

If you ever thought you were a fab competitor of Intel, you better get your affairs in order. There’s a new sheriff in town and he’s not going to be taking many prisoners. Thakur will be mounting the first major challenge TSMC has had since GlobalFoundries tried to take them on and lost. Samsung can do just fine with its own in-house demand and pick-ups from Nvidia and Qualcomm, but Thakur will be knocking on their doors too.

Gelsinger’s manifesto comes right after Intel’s announcement last week of a new partnership with DARPA to Develop Secure Structured ASIC Chips Made in the U.S. All this into President Biden’s push to shore up the under-nourished U.S. infrastructure which hasn’t seen any major national investment since the Interstate highway program and the establishment of NASA.

This is Intel’s moon shot, and Intel couldn’t have a better fuse lighter than Pat. The only thing that can stop him and this plan is a recalcitrant BOD that loses its nerve in a year’s time because things don’t happen over-night and Intel’s stock price sags a bit. Intel’s 7-nm struggle will not be easily resolved in the short run, despite the new investment in foundry. Short-term thinking is what’s crippled the U.S. and killed many a good company. Pat’s a tough character and doesn’t take no for an answer very easily. My money is on him.