Parts of Intel’s plan to continue with its take over is building a new chip packaging facility – and that is why the chipmaker is now pledging to spend a whopping US$7.1 Billion on new chip packaging facilities in Malaysia.
This will also be a major investment to help the company set a global precedent while also combating the global chip shortage that’s expected to persist until the year 2023.
The company is earmarking more than 30 billion ringgit toward expanding its capacity in the country, chief executive officer Pat Gelsinger told reporters Thursday.
In doing so, the company’s new packaging plant is expected to commence operation as soon as the year 2024, he said.
This will also become a big bet on Malaysia which is becoming a global frontier for the test and assembly of semiconductors.
Intel’s intention is to shore up its capacity in the island state of Penang while also creating a sprawling complex that’ll serve various industries ranging from cars to electronics manufacturing across the entire continent of Asia.
It’s part of a global expansion as Gelsinger moves to staunch market share losses and customer defections stemming in part from stumbles in upgrading technology.
Gelsinger who took the helm at Intel back in February with the hope of getting the company back to its leadership status from other big semiconductor manufacturers such as TSMC in Asia, Intel hopes to further its tentacles to Europe and the US next year.
At the same time, years of global industry underinvestment and a surge in Covid-era demand for computing devices have created an unprecedented shortage of the semiconductors needed in everything from autos to smartphones.
However, Gelsinger believes chip demand climbed 20% during the pandemic overall thinks it’ll last until the year 2023.
The Intel boss was also in Taiwan aside from Malaysia this week where he talked about how Asian manufacturing will be crucial to his turnaround efforts.
He also plans to meet with key leaders at TSMC – that’s according to those familiar with his schedule.
Even though Intel is very ambitious and wants to oust the likes of TSMC, the latter’s advanced manufacturing services are important to the growth of Intel.
Currently, Intel operates a plant in Dalian, China which will make the future Malaysian plant a big addition for the chipmaker in Asia.
This is Gelsinger’s first trip to Asia since taking the top job at Intel and comes as he lobbies the US government to allocate money for the country’s chip industry to domestic chip makers only.
In his perspective, he believes that foreign chipmakers like Samsung and TSMC that also have chip plants in the US aren’t supposed to get money through the Chips Act that is going through political approvals in the state of Washington.
As part of those efforts, he’s argued the concentration of advanced manufacturing in Asia and Taiwan is a strategic risk.
Global chip shortage and Malaysia
Globally, Malaysia accounts for about 13% of the world’s chip testing and packaging, making the country an important place for the semiconductor industry.
From here, chips ready for cars, smartphones, and other electronics are made available.
More than half a million people were employed in the E&E industry in 2020, working with global chip makers from STMicroelectronics NV and Infineon Technologies AG to Intel and Renesas Electronics Corp.
With Intel also coming to Malaysia, the initiative is expected to create over 4,000 positions for the company and over 5,000 construction jobs for local Malaysians, Trade Minister Azmin Ali told reporters.
The country also approved 47 billion ringgit of investment – most of which are from foreign companies in the E&E sector during the first half of the year alone compared to just 5 billion ringgit in the previous year, Azmin said.
The current state of the pandemic has slowed manufacturing and supply of production.
Malaysia is now keen to continue attracting the big-name investment and jobs it needs to climb the tech ladder and keep the local economy humming.