Intel CEO plans to build two new CPU fabs in Arizona

Enlarge / The new fabrication plants will likely be somewhere near the company's existing campus in Chandler, Arizona. (credit: Laura Segall/Bloomberg via Getty Images)

Intel CEO Patrick Gelsinger-a former chip designer who took the top slot from finance specialist Bob Swan this February-announced plans to expand Intel's manufacturing muscle this week.

Gelsinger wants to spend $20 billion on two new fabrication facilities in Arizona. Gelsinger says the expanded capacity will take on manufacturing for third-party chip designers in addition to Intel's own CPUs-similar to the business model of TSMC, the Taiwan-based fabricator that builds processors for many "fabless" industry giants, including Apple, AMD, and Qualcomm.

The move comes in sharp contrast to many analysts' predictions that Intel would spin-off silicon fabrication entirely. Intel has had great difficulty shrinking its manufacturing process beyond 14 nm, adding to its ability to keep up with AMD-which has benefited greatly from TSMC's successful process shrink to 7 nm. Since then, TSMC has added volume production for 5 nm process, with a further shrink to 3 nm expected later this year.

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