Intel announced it is planning to invest $3.5 billion in a chip manufacturing plant in Rio Rancho, New Mexico. Out of this amount, $20 billion will be utilized o build two new facilities in Arizona.
Yesterday, Intel confirmed the $3.5 billion upgrade plan. It was first reported on CBS’ 60 Minutes. Keyvan Esfarjani, Intel’s manufacturing chief will detail the plan at a press conference with New Mexico Gov. Michelle Lujan Grisham, New Mexico’s two senators, Martin Heinrich and Ben Ray Luján, and Rep. Teresa Leger Fernandez.
It seems the company is happy with current political efforts to drum up federal funding for the chip industry of the US. New CEO Pat Gelsinger said instead of spending it on buying its own stock, Intel will invest more of its own money because keeping shareholders happy but doesn’t help in research or in operations.
Gelsinger told 60 Minutes “We will not be anywhere near as focused on buybacks going forward as we have in the past. That’s been reviewed as part of my coming into the company, agreed upon with the board of directors.”
Analyst Patrick Moorhead tweeted Monday that appeasing shareholders was important for Intel as it struggled` He posted “If they didn’t do buybacks I think the company would have been broken up.”
For decades, Intel led chipmaking but it recently fell behind Taiwan Semiconductor Manufacturing Co. Under the leadership of Gelsinger, Intel is investing in its new chipmaking plants called fabs as part of a major effort to restore its competitiveness. Apart from building chips for itself, it is also considering making chips for others.
Intel is a profit-making company but it faces stiff competition on several fronts from companies like TSMC and Samsung. Apple has split itself from Intel for its new M series processors. Intel also faces a new rival, RISC-V who has won interest from some notable chip startups.
Gelsinger told 60 Minutes “We believe it’s gonna take us a couple of years and we will be caught up.”