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Sixteen miles north of Albuquerque, in Rio Rancho, New Mexico, an Intel chip plant sits on more than 200 acres of land. The site was first established in the 1980\u2019s, part of it built on top of a sod farm. In 2007, as Intel\u2019s business faltered, operations in one of the key fabs, Fab 9, came to a halt. Employees say families of raccoons and a badger took up residence in the space.<\/p>\n
Then, in January 2024, the dormant fab was booted up again. Intel funneled billions into the facility, including $500 million it was granted from the US CHIPS Act. Now, Fab 9 and its neighbor, Fab 11X, are critical infrastructure for one of Intel\u2019s quietly fast-growing businesses: Advanced chip packaging.<\/p>\n
Packaging involves combining multiple chiplets, or smaller components, onto a single, custom chip. Over the past six months, Intel has been signaling that its advanced packaging business, which operates within the Foundry chip-making arm of the company, is having a growth spurt. The company\u2019s efforts around this have it going head-to-head with Taiwan Semiconductor Manufacturing Corporation, which far surpasses Intel\u2019s production in terms of scale. But in an era where AI is driving demand for all kinds of computing power, and leading nearly every major tech company to consider making its own custom chips, Intel thinks this effort can help it grab a bigger slice of the AI pie.<\/p>\n
During a quarterly earnings call in January, Intel CEO Lip-Bu Tan claimed that Intel\u2019s packaging is a \u201cvery big differentiator\u201d from competitors. Chief financial officer Dave Zinsner said on the same call that the company expects to see revenue from packaging \u201ccome in even before we start to see meaningful wafer revenue.\u201d Zinsner said he had revised his packaging revenue projections over the past 12 to 18 months, from hundreds of millions of dollars to \u201cwell north of $1 billion.\u201d<\/p>\n
Zinsner elaborated on this in March at the Morgan Stanley Technology, Media, and Telecom conference, when he called Intel's packaging \u201cironically, the more interesting part of the Foundry business today,\u201d adding that the company was \u201cclose to closing some deals that are in the billions of dollars per year, in terms of revenue on packaging.\u201d<\/p>\n
Multiple sources say that Intel has been in ongoing talks with at least two large customers for its advanced packaging services: Google and Amazon, which both make their own custom chips but outsource parts of the fabrication process. These deals would be a boon for beleaguered chipmaker Intel, which is attempting a comeback\u2014partially funded by the US government\u2014after years of stagnation and missing out on mobile chips.<\/p>\n
A spokesperson for Google, Lee Fleming, declined to comment, saying that Google doesn\u2019t publicly discuss its supplier relationships. Amazon also declined to comment. Intel said it does not comment on specific customers.<\/p>\n
Intel\u2019s ambitions for its advanced packaging business depend largely on whether the company can secure outside customers like these tech giants. Since 2024, the company has effectively been split into two: There\u2019s the longstanding \u201cproduct\u201d side, where Intel designs and sells cost-efficient CPUs to PC makers and data centers; and the aspirational Foundry side, where Intel makes advanced semiconductors.<\/p>\n
Intel\u2019s Foundry plans and the number of advanced chip systems it can yield are closely-watched signals amongst tech analysts and investors, who in recent years have seen Intel cycle through CEOs and start and stop fab buildouts. Zinsner, for one, said at the Morgan Stanley conference that he now believes Intel Foundry\u2019s packaging business can achieve the same 40 percent gross margins that it claims on the rest of its products.<\/p>\n
It\u2019s still an extremely challenging proposition. \u201cPackaging is not as easy as saying, \u2018I want to run 100,000 wafers per month,\u2019\u201d says Jim McGregor, a longtime chip industry analyst and the founder of Tirias Research, referring to a continuous flow of chips in various stages of production. \u201cIt really comes down to whether Intel\u2019s [packaging] fabs can make deals. If we see them expanding those operations more, that\u2019s an indicator that they have.\u201d<\/p>\n
Last month, Anwar Ibrahim, the prime minister of Malaysia, revealed in a post on Facebook that Intel is expanding its Malaysian chip-making facilities, which were first established back in the 1970s. Ibrahim said the head of Intel\u2019s Foundry, Naga Chandrasekaran, had \u201coutlined plans to commence the first phase\u201d of expansion, which would include advanced packaging.<\/p>\n
\u201cI welcome Intel's decision to begin operations for the complex later this year,\u201d a translated version of Ibrahim\u2019s post read. An Intel spokesperson, John Hipsher, confirmed that it\u2019s building out additional chip assembly and test capacity in Penang, \u201camid rising global demand for Intel Foundry packaging solutions.\u201d<\/p>\n
According to Chandrasekaran, who took over Intel\u2019s Foundry operations in 2025 and spoke exclusively with WIRED during the reporting of this story, the term \u201cadvanced packaging\u201d itself didn\u2019t exist a decade ago.<\/p>\n
Chips have always required some sort of integration of transistors and capacitors, which control and store energy. For a long time the semiconductor industry was focused on miniaturization, or, shrinking the size of components on chips. As the world began demanding more from its computers in the 2010s, chips started to get even more dense with processing units, high-bandwidth memory, and all of the necessary connective parts. Eventually, chipmakers started to take a system-in-packages or package-on-package approach, in which multiple components were stacked on top of one another in order to squeeze more power and memory out of the same surface space. 2D stacking gave way to 3D stacking.<\/p>\n
TSMC, the world\u2019s leading semiconductor manufacturer, began offering packaging technologies like CoWoS (chip on wafer on substrate) and, later, SoIC (system on integrated chip) to customers. Essentially, the pitch was that TSMC would handle not just the front end of chip-making\u2014the wafer part\u2014but also the back end, where all of the chip tech would be packaged together.<\/p>\n
Intel had ceded its chip manufacturing lead to TSMC at this point, but continued to invest in packaging. In 2017 it introduced a process called EMIB, or embedded multi-die interconnect bridge, which was unique because it shrunk the actual connections, or bridges, between the components in the chip package. In 2019, it introduced Foveros, an advanced die-stacking process. The company\u2019s next packaging advancement was a bigger leap: EMIB-T.<\/p>\n
Announced last May, EMIB-T promises to improve power efficiency and signal integrity between all the components on the chips. One former Intel employee with direct knowledge of the company\u2019s packaging efforts tells WIRED that Intel\u2019s EMIB and EMIB-T are designed to be a more \u201csurgical\u201d way of packaging chips than TSMC\u2019s approach. Like most chip advancements, this is supposed to be more power efficient, save space, and, ideally, save customers money in the long runThe company says EMIB-T will roll out in fabs this year.<\/p>\n
Unsurprisingly, AI has been a big catalyst for these changes. \u201cBecause of AI, advanced packaging has really come to the forefront,\u201d Chandrasekaran said. \u201cEven more so than the silicon itself, chip packaging is going to transform how this AI revolution comes to fruition over the next decade.\u201d<\/p>\n
Intel began readying for mass production of EMIB-T in Rio Rancho, New Mexico. The Rio Rancho facility houses around 2700 Intel employees, roughly 200 less than it had last year; Tan slashed Intel\u2019s workforce after he took over as CEO. The surrounding land is arid desert. As is the case with a lot of tech infrastructure expansions, local advocacy groups have expressed serious concerns about Intel\u2019s water usage and the fumes the plant is giving off. (Intel claims it recycles water at the Rio Rancho site.)<\/p>\n
A short tour inside Rio Rancho\u2019s Fab 9 doesn\u2019t reveal much to the untrained eye. It\u2019s slightly less \u201cclean\u201d than Intel\u2019s Fab 52 semiconductor plant in Arizona, since its method of removing air particles is different there, but the standard clean room precautions and sanitized, zipped-up suits are still required for entry. Inside the fab, hair-thin silicon wafers are mounted, diced, and mold-grinded.<\/p>\n
Katie Prouty, the Rio Rancho site plant manager and a 31-year veteran of Intel, emphasizes during a walk-through that one of Intel\u2019s selling points for advanced packaging is that customers can opt to use Intel for any part of the process, or, \u201center and exit the highway\u201d at any point. A customer can, for example, purchase wafers from one entity, then come to Intel\u2019s fabs for the next step; or contract with an outsourced semiconductor assembly and test company for traditional chip packaging, then use Intel for advanced packaging.<\/p>\n
\u201cThat\u2019s not something Intel did before. We never took in other customers\u2019 wafers,\u201d Prouty said. \u201cThat\u2019s been a huge mindset shift.\u201d<\/p>\n
Competent, cutting-edge technology? Check. Chips packaged specifically for AI? Check. Flexibility for customers with certain needs? Check. So: Where are all the customers?<\/p>\n
One former Intel employee, speaking on background, said that Intel\u2019s target packaging customers may be hesitant to announce partnerships with Intel for a couple reasons. They\u2019re either waiting to see if the company can deliver on its fab expansion promises, or they\u2019re concerned TSMC could potentially allocate fewer wafers to customers once they say they\u2019re using Intel for packaging. It\u2019s not the tech itself they would be taking a risk on, the former employee added; it\u2019s the broader market dynamics.<\/p>\n
Chandrasekaran is more circumspect. \u201cI think we want to be very disciplined around the idea of: We don\u2019t talk about our customers. Successful foundries don\u2019t say, \u2018We have signed up these customers.\u2019 We want the customers to talk about our product.\u201d<\/p>\n
Intel may want to consider adopting another motto: If they come, we will build it\u2014and at great capital expense.The big indicator that the customers have arrived, Chandrasekaran says, will be a notable jump in Intel Foundry\u2019s spending. \u201cAs we sign up these customers, we\u2019ll have to increase our capital expenditures,\u201d he says. \u201cAnd then the street will see it.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Save StorySave this storySave StorySave this story Sixteen miles north of Albuquerque, in Rio Rancho, New Mexico, an Intel chip plant sits on more than 200 acres of land. The site was first established in the 1980\u2019s, part of it built on top of a sod farm. In 2007, as Intel\u2019s business faltered, operations in […]<\/p>\n","protected":false},"author":1,"featured_media":48741,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":{"0":"post-48740","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/48740","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/comments?post=48740"}],"version-history":[{"count":0,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/48740\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media\/48741"}],"wp:attachment":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media?parent=48740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/categories?post=48740"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/tags?post=48740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}