Intel's creating its own contract foundry business to rival TSMC and help solve the chip supply crisis

Intel Ocotillo Fab 42
(Image credit: Intel)

Intel's new CEO, Pat Gelsinger, has announced plans to transform Intel into a global leader in silicon manufacturing. It's going to go from focusing on producing its own chips, to using its fabs to produce chips for others as well. It isn't doing it purely for altruistic reasons either, as Intel sees the silicon manufacturing market as being worth $100bn by 2025.

Your next upgrade

(Image credit: Future)

Best CPU for gaming: the top chips from Intel and AMD
Best graphics card: your perfect pixel-pusher awaits
Best SSD for gaming: get into the game ahead of the rest

Given the state of silicon demand right now, a major player like Intel offering out fab space to fabless companies has got to be tempting, even to traditional competitors likes AMD and Nvidia. If all goes as Intel's way, it could well be the case that your next AMD CPU could be produced by Intel and the same for your next Nvidia graphics card. Though that potential future is a long way down the line yet.

Intel is playing politics here as well, as it was keen to point out that much of the world's silicon is currently produced in Asia. According to Intel's figures, 80 percent of silicon is produced in Asia, with 15 percent produced in the US and only 5 percent in Europe. 

Intel's looking to change that picture, and already has fabs in the US, in Ireland, and in Israel. The current reliance on production in Asia doesn't necessarily play too nicely with tech that's at the heart of national security. By expanding manufacturing away from Asia, it gives governments options they might not consider today.

Intel is putting its money where its mouth is and has already announced the expansion of its Octollio campus in Chandler, Arizona, with the plan for two new fabs. The upgrade to Fab 42, as it's known, accounts for a $20bn investment, and Pat Gelsinger suggested that there would be the following expansion announced shortly. 

Intel also said that it's going to be using the likes of TSMC, Samsung, and Global Foundries to fulfil it's own manufacturing needs in the shorter term up to 2023 as well. This will help smooth over some of the manufacturing problems it has faced getting to 10nm, and it should help with the transition to 7nm too.

Alan Dexter

Alan has been writing about PC tech since before 3D graphics cards existed, and still vividly recalls having to fight with MS-DOS just to get games to load. He fondly remembers the killer combo of a Matrox Millenium and 3dfx Voodoo, and seeing Lara Croft in 3D for the first time. He's very glad hardware has advanced as much as it has though, and is particularly happy when putting the latest M.2 NVMe SSDs, AMD processors, and laptops through their paces. He has a long-lasting Magic: The Gathering obsession but limits this to MTG Arena these days.

Read more
A close-up stylized photo of a silicon wafer, showing many small processor dies
Broadcom and Nvidia are claimed to be testing manufacturing on Intel's 18A process node, and even AMD is reportedly interested
A chip being held up in an Intel fab
Intel is reportedly in talks to spin off its chip factories into a partnership with arch rival TSMC and now I think I've seen everything
Bill Gates speaks onstage for a special conversation during "What’s Next? The Future With Bill Gates"at The Paris Theater on September 26, 2024 in New York City.
Bill Gates laments Pat Gelsinger's failure to save Intel: 'I was hoping for his sake, for the country's sake that he would be successful'
 photo shows a factory tool that places lids on data center system-on-chips at an Intel fab in Chandler, Arizona, in December 2023. In February 2024, Intel Corporation launched Intel Foundry as the world’s first systems foundry for the AI era, delivering leadership in technology, resiliency and sustainability.
So, wait, now TSMC is supposedly pitching a joint venture with Nvidia, AMD and Broadcom to run Intel's ailing chip fabs?
 photo shows a factory tool that places lids on data center system-on-chips at an Intel fab in Chandler, Arizona, in December 2023. In February 2024, Intel Corporation launched Intel Foundry as the world’s first systems foundry for the AI era, delivering leadership in technology, resiliency and sustainability.
TSMC now said not to be eyeing up Intel's fabs while other rumours suggest Intel could be split between TSMC and Broadcom
A close-up stylized photo of a silicon wafer, showing many small processor dies
Intel is still using TSMC for 30% of its wafer demands: 'We were talking about trying to get that to zero as quickly as possible. That's no longer the strategy'
Latest in Processors
Aooster's G-Flip 370 mini PC
This palm-sized PC has removably memory, a flip up screen, and a Ryzen AI 9 HX 370 processor
Texas Instruments MSPM0C1104 tiny chip
World's smallest microcontroller looks like I could easily accidentally inhale it but packs a genuine 32-bit Arm CPU
Intel engineers inspect a lithography machine
Finally some good vibes from Intel as stock jumps 15% on new CEO hire and Arizona fab celebrates 'Eagle has landed' moment for its 18A node
A photo of an Intel Core Ultra 9 285K processor surrounded by DDR5 memory sticks from Corsair, Kingston, and Lexar
Fresh leak suggests Intel's on-again-off-again Arrow Lake CPU refresh is back on the menu (boys)
 photo shows a factory tool that places lids on data center system-on-chips at an Intel fab in Chandler, Arizona, in December 2023. In February 2024, Intel Corporation launched Intel Foundry as the world’s first systems foundry for the AI era, delivering leadership in technology, resiliency and sustainability.
Return of the gigahertz wars: New Chinese transistor uses bismuth instead of silicon to potentially sock it to Intel and TSMC with 40% more speed
 photo shows a factory tool that places lids on data center system-on-chips at an Intel fab in Chandler, Arizona, in December 2023. In February 2024, Intel Corporation launched Intel Foundry as the world’s first systems foundry for the AI era, delivering leadership in technology, resiliency and sustainability.
So, wait, now TSMC is supposedly pitching a joint venture with Nvidia, AMD and Broadcom to run Intel's ailing chip fabs?
Latest in News
Three sheep with big guns in Palworld.
It was 'super popular to hate Palworld' after launch, says community manager: 'A lot of companies might crumble under the threats, under the pressure'
Palworld Ancient Civilization Parts - Grizzbolt with a minigun
'It was a very depressing day': Palworld community manager reveals studio's reaction to Nintendo lawsuit
CS 1.6 remade in CS: Legacy.
A gorgeous ground-up remake of Counter-Strike 1.6 is on its way to Steam, and one of the game's original creators says 'it really gives me old vibes'
Portal P3 pinball table
There's a new Portal game and it costs $12,500
MrBeast posing in front of a stack of cashing, promoting Beast Games season 2
Beast Games opens casting for season 2: MrBeast lost a ton of money on season 1 but apparently not enough that he won't do it again
Ark: Lost Colony teaser still.
Ark 2 is still on: The next Ark expansion 'leads into the events of Ark 2,' says Studio Wildcard