They call it, the Gelsinger plan.
A bold new strategy launched by the Intel CEO, Pat Gelsinger, which includes a massive US$20 billion investment into two new chipmaking facilities — aims to reassert its position as the undisputed leader of the semiconductor industry, CNN Business reported.
It’s tough to call Intel, a semiconductor giant, a comeback kid — but that’s exactly what is happening here.
All told, the strategy will likely provide a boost in Intel investors’ confidence, and it’s coming “just in time,” Futurum Research founding partner and principal analyst Daniel Newman said.
“I also see this as a sign of a more confident and robust Intel under new CEO Pat Gelsinger,” Newman said.
“I believe this effort was underway with former CEO Bob Swan [but] Gelsinger brings a tech swagger back to the company and in his first 5 weeks back is showing the company’s ambition to return to its market leadership roots.”
Gelsinger took over a company facing a host of challenges, including unprecedented competition from Apple and other former partners and an activist shareholder, CNN reported.
Intel has also experienced major delays in producing next-generation chips, allowing Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, and Samsung to run ahead.
And it is still trying to perfect its next-gen 7-nanometer chip.
The new strategy, dubbed “IDM 2.0” because of its transformation of Intel’s integrated device manufacturing model (wherein it both designs and manufactures chips), could help solve many of those problems, CNN reported.
To address its manufacturing issues and prevent future delays, Intel plans to expand its use of third-party chipmakers such as TSMC, a tack many of its competitors have taken.
Starting in 2023, Intel will work with third-party foundries to produce products at “the core of Intel’s computing offerings for both client and data center segments.”
“This will provide the increased flexibility and scale needed to optimize Intel’s roadmaps for cost, performance, schedule and supply,” it said.
While Intel plans to expand the outsourcing of some of its chipmaking, Gelsinger reaffirmed the company’s longtime commitment to manufacturing most of its products in-house, CNN reported.
“We are setting a course for a new era of innovation and product leadership at Intel,” Gelsinger said.
The company announced a US$20 billion investment to add two new chip manufacturing facilities, called “fabs,” to its Arizona campus, a move that is expected to create “over 3,000 permanent high-tech, high-wage jobs; over 3,000 construction jobs; and approximately 15,000 local long-term jobs.”
It also plans to launch a new business unit, Intel Foundry Services, dedicated to manufacturing chips designed by other semiconductor companies, CNN reported.
This announcement comes amid a global chip shortage that has hampered industries ranging from autos to video games.
Ford Motor Co. said on Thursday it will idle production of its highly profitable F-150 pickup truck at a plant in Michigan through Sunday due to the global semiconductor chip shortage, The National Post reported.
Ford said the latest action is part of its prior forecast the chip shortage could shave US$1 billion to $2.5 billion off its 2021 profits.
Stellantis, formerly Fiat Chrysler, also recently confirmed it was partially assembling some of its older Ram pickups due to a lack of semiconductor chips.
Reuters also reported that General Motors will stop production of the Chevrolet Colorado and GMC Canyon midsize pickup trucks in Wentzville, Missouri, due to a lack of chips.
According to the report, production will shut down on March 29 and resume on April 5.
The newly hired Gelsinger stands to collect well over US $100 million in salary and stock options at his new job.
The chipmaker offered the eye-popping incentives to lure him away from his role running VMware, which valued his annual compensation at more than US$42 million.