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Intel is expanding advanced chip packaging in New Mexico and Malaysia and says the business could top $1B, as it competes with TSMC for AI customers.
In short: Chip packaging, the step that combines multiple chip parts into one, is becoming a key battleground for AI chips, and Intel is investing heavily to compete.
Intel has restarted and expanded work at its Rio Rancho, New Mexico site, including bringing a once-idle facility called Fab 9 back online in January 2024. The company has poured billions into the site, including $500 million from the US CHIPS Act, a federal program that helps fund chip manufacturing in the US.
Intel is focusing on “advanced chip packaging,” which is a way to combine several smaller chip parts into a single chip. Think of it like building one powerful device by tightly connecting several smaller modules (like snapping together high performance Lego pieces, but at a microscopic scale). This matters for AI because AI systems often need chips that mix processing and memory in very efficient ways.
Intel executives have recently pointed to packaging as a faster-growing part of its Foundry business, which makes chips for other companies. Intel CEO Lip-Bu Tan and CFO Dave Zinsner said Intel expects packaging revenue to arrive early, with Zinsner saying projections have risen to well above $1 billion. Zinsner also said Intel is close to packaging deals that could bring in billions of dollars per year.
Wired reports Intel has been in talks with at least two big potential customers, Google and Amazon, which design their own chips but outsource parts of the work. None of the companies confirmed these specific customer relationships.
The big question is whether Intel can sign enough outside customers to keep its packaging expansion growing, especially as it competes with TSMC, the much larger chip manufacturer. Intel also confirmed it is expanding chip assembly and testing capacity in Penang, Malaysia, which could signal rising demand. Analysts say a noticeable jump in Intel Foundry spending may be the clearest public sign that major customers have committed.
Source: Wired