Sixteen miles north of Albuquerque lies Intel’s Rio Rancho chip plant, which has undergone a major reboot. After struggling with operations for years, particularly in Fab 9 where raccoons and a badger once made their home, Intel has invested billions into revitalizing this facility. A portion of this funding came from the US CHIPS Act, with the fab now critical to Intel’s burgeoning advanced chip packaging business.
Advanced chip packaging, which involves combining multiple smaller chiplets into a singular, custom chip, has become increasingly essential as demand for AI capabilities skyrockets. In a competitive landscape dominated by Taiwan Semiconductor Manufacturing Corporation (TSMC), Intel is vying to capitalize on the AI boom, which has seen major players like Google and Amazon seek custom chip solutions.
During a recent earnings call, Intel’s CEO Lip-Bu Tan emphasized that their packaging services provide a significant edge over competitors. Intel’s CFO Dave Zinsner projected that revenue from this sector could exceed $1 billion, representing a shift from their previous expectations of hundreds of millions. At the Morgan Stanley Technology, Media, and Telecom conference, Zinsner hinted at imminent multi-billion dollar deals in the pipeline.
Intel is reportedly in negotiations with large companies, including Google and Amazon, who both develop custom chips but outsource some fabrication, making them potential key clients for Intel’s packaging services. This shift comes at a crucial time for Intel, which is striving for a comeback after years of stagnation and government support.
Intel’s Foundry division has been focused on meeting the rising demands for advanced packaging. Their strategy includes flexibility for clients, allowing customizations throughout the chip-making process, a departure from their previous practices. This adaptability may attract clients who are currently hesitant to partner with Intel, waiting instead for evidence of sustained delivery on their expansion promises or concerns over wafer allocation by TSMC.
As Intel ramps up production capabilities with the new EMIB-T technology designed to enhance power efficiency and signal integrity, the company is also expanding operations in Malaysia to meet global demand. Chief of Intel’s Foundry, Naga Chandrasekaran, noted that the term “advanced packaging” is a recent innovation, with industry trends shifting from pure miniaturization to integrating more components efficiently.
The Rio Rancho facility, housing around 2,700 employees, faces scrutiny over environmental issues, particularly regarding its water consumption and emissions. Still, as Intel continues to invest in new technologies and partnerships, the landscape of semiconductor manufacturing could be significantly altered, with AI leading the charge.
