Intel Plans To Quadruple Chip Packaging Capacity By 2025 With New Facility In Malaysia

24-8-2023 (KUALA LUMPUR) Intel, the leading American chipmaker, is set to significantly increase its capacity for advanced chip packaging services by 2025, aiming to reclaim its position as the global leader in semiconductor manufacturing. As part of this expansion, the company is constructing a new facility in Penang, which will be its first overseas location for advanced 3D chip packaging, known as Foveros technology. Additionally, Intel is developing an extra chip assembly and testing factory in Kulim, as part of a $7 billion investment in Malaysia.

The utilization of advanced chip packaging technology involves combining different types of chips into a single package, resulting in enhanced computing power and reduced power consumption.

Robin Martin, Corporate Vice President for Manufacturing Supply Chain and Operations at Intel, revealed that Malaysia is expected to become the company’s largest production base for 3D chip packaging. However, Intel did not provide a specific timeline for the commencement of mass production at the Penang facility. Malaysia already plays a crucial role in Intel’s chip packaging, assembly, and testing operations, employing 15,000 personnel across the country.

Intel has secured commitments from major entities such as Amazon, Cisco, and the U.S. government to utilize its advanced packaging technology. Furthermore, Intel plans to incorporate this technology into its latest central processing unit (CPU) for personal computers, with shipments scheduled to commence later this year.

Traditionally, chip packaging was considered less critical and technologically demanding compared to chip manufacturing. However, as the conventional approach of squeezing more transistors into a smaller space becomes increasingly challenging, chip packaging has emerged as a pivotal area in the race to develop more powerful chips.

The recent surge in generative artificial intelligence (AI) has further intensified interest in advanced chip packaging. For instance, Nvidia’s H100, which powers the widely used ChatGPT chatbot, utilizes Taiwan Semiconductor Manufacturing Co.’s advanced packaging process. This process combines a graphics processing unit (GPU) with six high-bandwidth memory chips, enabling high-speed data transmission and the overall performance required for training large AI language models.

Responding to the growing demand for AI, TSMC recently announced plans to construct a $2.9 billion advanced chip packaging facility in Miaoli, Taiwan.

According to Yole Intelligence, the market for advanced chip packaging services was valued at $44.3 billion in 2022 and is projected to grow at a compound annual rate of 10.6% from 2022 to reach $78.6 billion by 2028. Mark Li, a veteran semiconductor analyst at Sanford C. Bernstein, stated that the increasing adoption of AI computing is a significant driver for advanced chip packaging expansion. However, Li emphasized the need for AI applications to proliferate in order to sustain this enthusiasm in the future.

Intel’s development of 3D chip packaging technology is primarily centered in Oregon, United States, while its major production base is located in New Mexico. Over the next decade, Intel plans to invest over $10 billion in New Mexico and Malaysia for this purpose.

Intel aims to offer chip packaging services to multiple customers, even if they do not produce chips using Intel’s foundry service. In recent years, the company has undergone a significant transformation, opening up its manufacturing, packaging, assembly, and testing services to external clients in order to generate new growth opportunities.

Steve Long, Intel’s Corporate Vice President of Sales and Marketing for Asia Pacific and Japan, highlighted that the company’s extensive global production footprint will help attract customers seeking manufacturing and packaging services. Long emphasized Intel’s unique position, stating, “There is one company today that has the breadth of resiliency and breadth of global presence already, and that is Intel.”

Apart from Malaysia, Intel’s operations include a vital chip packaging, assembly, and testing base in India, where it operates its largest design and engineering center outside of the United States, employing 14,000 individuals. Moreover, Intel operates advanced chip manufacturing sites in Ireland and Israel, and is expanding chip production in Germany, as well as chip packaging facilities in Poland and Vietnam.