Intel to spend $20 billion on U.S. chip plants as CEO challenges Asia dominance

- REUTERS - Mar 23, 2021 -

Stephen Nellis -


FILE PHOTO: An Intel Tiger Lake chip is displayed at an Intel news conference during the 2020 CES in Las Vegas, Nevada, U.S. January 6, 2020. REUTERS/Steve Marcus/File Photo

(Reuters) - Intel Corp will greatly expand its advanced chip manufacturing capacity as the new chief executive announced plans to spend as much as $20 billion to build two factories in Arizona and to open up its factories to outside customers.


The move by CEO Pat Gelsinger on Tuesday aims to restore Intel’s reputation after manufacturing delays sent shares plunging last year. The strategy will directly challenge the two other companies in the world that can make the most advanced chips, Taiwan’s Semiconductor Manufacturing Co Ltd (TSMC) and Korea’s Samsung Electronics Co Ltd.


And it will also aim to tilt a technological balance of power back to the United States and Europe as government leaders on both continents have become concerned about the risks of a concentration of chipmaking in Taiwan given tensions with China.


Intel shares rose 6.3% after the company disclosed its new strategy and full-year financial guidance for 2021. Some investors such as Third Point LLC had previously urged Intel to consider spinning off its costly chip manufacturing operations.


Intel said it expects $72 billion in revenue and adjusted earnings per share of $4.55, compared with analyst estimates of $72.9 billion and $4.77 per share, according to Refinitiv data. The company said it expects to spend $19 billion to $20 billion on capital expenditures.

Gelsinger said that 2021 forecast “reflects the industry-wide shortage” of some components such as substrates.


Intel is one of the few remaining semiconductor companies that both designs and manufactures its own chips. Rival chip designers such as Qualcomm Inc and Apple Inc rely on contract manufacturers.



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https://www.reuters.com/article/us-intel-manufacturing-idUSKBN2BF2WU


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