Intel breaks ground on $20 bln Arizona plants as U.S. chip factory race heats up

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A handout photo shows construction equipment at the site of a future Intel Corp chip factory in Chandler, Arizona, U.S., September 23, 2021. Picture taken September 23, 2021. Courtesy of Intel Corp/Handout via REUTERS.

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Sept 24 (Reuters) - Intel Corp (INTC.O) on Friday broke ground on two new factories in Arizona as part of its turnaround plan to become a major manufacturer of chips for outside customers.

The $20 billion plants - dubbed Fab 52 and Fab 62 - will bring the total number of Intel factories at its campus in Chandler, Arizona, to six. They will house Intel's most advanced chipmaking technology and play a central role in the Santa Clara, California-based company's effort to regain its lead in making the smallest, fastest chips by 2025, after having fallen behind rival Taiwan Semiconductor Manufacturing Co Ltd (2330.TW).

The new Arizona plants will also be the first Intel has built from the ground up with space reserved for outside customers. Intel has long made its own chips, but its turnaround plan calls for taking on work for outsiders such as Qualcomm Inc (QCOM.O)'s (AMZN.O) cloud unit, as well as deepening its manufacturing relationship with the U.S. military.

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"We want to have more resilience to the supply chain," Intel Chief Executive Pat Gelsinger, who earlier in the week attended a White House meeting on the global chip shortage, told Reuters in an interview. "As the only company on U.S. soil that can do the most advanced lithography processes in the world, we are going to step up in a big way."

Gelsinger said it was too early to say how much of the new plants' capacity would be reserved for outside customers. He said the plants would produce "thousands" of wafers per week.

Wafers are the silicon discs on which chips are made, and each can hold hundreds or even thousands of chips.

Intel rival TSMC has also purchased land to build its first U.S. campus in Phoenix, not far from Intel's location, where TSMC plans up to six chip factories, Reuters previously reported.

Gelsinger said Intel plans to announce another U.S. campus site before the end of the year that will eventually hold eight chip factories.

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Reporting by Stephen Nellis in San Francisco; Editing by Dan Grebler

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