How Intel is making semiconductors in a global shortage

Some have more than 50 billion tiny transistors that are 10,000 times smaller than the width of a human hair. They are made on gigantic, ultra-clean factory floors Seven stories high and as long as four soccer fields.

In many ways, microchips are the lifeblood of the modern economy. They power computers, smartphones, cars, household appliances and numerous other electronic devices. But global demand for them has surged since the pandemic, which has also caused supply chain disruptions, leading to global shortages.

That, in turn, fuels inflation and raises alarms that the United States is becoming overly dependent on foreign-made chips. The United States accounts for only about 12 percent of global semiconductor manufacturing capacity; more than 90 percent of the most advanced chips come from Taiwan.

Intel, a Silicon Valley titan trying to rebuild its longtime lead in chip manufacturing technology, is making a $20 billion bet that it can help plug the chip deficit. The company is building two factories at its chip manufacturing complex in Chandler, Arizona, which will take three years to complete, and recently announced plans for a potentially major expansion with new locations in New Albany, Ohio and Magdeburg, Germany.

Why does manufacturing millions of these tiny components mean building – and spending – so much? A look inside Intel’s manufacturing facilities in Chandler and Hillsboro, Oregon provides some answers.

Chips, or integrated circuits, began replacing bulky single transistors in the late 1950s. Many of these tiny components are fabricated on a piece of silicon and bonded together to work together. The resulting chips store data, amplify radio signals, and perform other operations; Intel is famous for a range of so-called microprocessors, which perform most of the computing functions of a computer.

Intel has managed to shrink the transistors in its microprocessors to amazing sizes. But rival Taiwan Semiconductor Manufacturing Company can make even smaller components, a key reason Apple chose them to make the chips for its latest iPhones.

Such gains by a company based in Taiwan, an island China claims as its own, reinforce signs of a widening technology gap that could jeopardize advances in computers, consumer devices, and military hardware, both from China’s ambitions and from natural threats in Taiwan, such as: like earthquakes and droughts. And it’s put a spotlight on Intel’s efforts to reclaim the technology lead.

Chipmakers are packing more and more transistors onto each piece of silicon, which is why the technology is doing better every year. It’s also why new chip factories cost billions and fewer companies can afford to build them.

In addition to the cost of buildings and machinery, companies have to spend a lot of money to develop the complex processing steps used to make chips from board-sized silicon wafers – which is why the factories are called “fabs”.

Huge machines project designs for chips onto each wafer, then deposit and etch away layers of material to make their transistors and connect them. Up to 25 wafers move between these systems in special pods on automated overhead conveyors.

Processing a wafer involves thousands of steps and takes up to two months. TSMC has set the pace for production in recent years, operating “gigafabs,” sites with four or more production lines. Dan Hutcheson, vice chairman of market research firm TechInsights, estimates that each site can process more than 100,000 wafers per month. He puts the capacity of Intel’s two planned $10 billion plants in Arizona at about 40,000 wafers per month each.

After processing, the wafer is cut into individual chips. These are tested and packaged in plastic cases to be connected to circuit boards or parts of a system.

This move has become a new battlefield because it’s harder to make transistors even smaller. Companies are now stacking multiple chips or placing them side-by-side in a package and connecting them so that they act like a single piece of silicon.

While packing a handful of chips together is now routine, Intel has developed an advanced product that uses new technology to bundle together a remarkable 47 individual chips, including some from TSMC and other companies, as well as those made in Intel fabs.

Intel chips typically sell for hundreds to thousands of dollars a piece. For example, Intel released its fastest microprocessor for desktop computers in March, starting at $739. A piece of dust invisible to the human eye can ruin you. So factories need to be cleaner than a hospital operating room and require complex systems to filter air and regulate temperature and humidity.

Fabs must also withstand almost any vibration that can cause expensive equipment to malfunction. This is how fabulous clean rooms are created on huge concrete slabs on special shock absorbers.

Also crucial is the ability to move large volumes of liquids and gases. The top level of Intel’s factories, which are about 70 feet tall, has huge fans to help circulate air into the clean room directly below. Below the clean room are thousands of pumps, transformers, control cabinets, supply pipes and coolers connected to production machines.

Factories are water-intensive operations. Water is required in many phases of the production process to clean wafers.

Intel’s two Chandler sites combined draw about 11 million gallons of water daily from the local utility. Intel’s future expansion will require significantly more, an apparent challenge for a drought-stricken state like Arizona, which has cut water allocations to farmers. But farming actually uses a lot more water than a chip plant.

Intel says its Chandler sites, which depend on three rivers and a system of wells for supply, recover about 82 percent of the freshwater they use through filtration systems, tailings ponds and other equipment. That water is sent back to the city, which operates Intel-funded treatment plants and redistributes it for irrigation and other non-potable purposes.

Intel hopes to help improve water supplies in Arizona and other states by 2030 by working with environmental groups and others on projects that conserve and restore water to local communities.

Intel will need around 5,000 construction workers over three years to build its future factories.

You have a lot to do. Excavating the foundations is expected to remove 890,000 cubic yards of soil, which will be carted away at a rate of one dump truck per minute, said Dan Doron, Intel site manager.

The company expects to pour more than 445,000 cubic meters of concrete and use 100,000 tons of rebar for the foundations – more than it used to build the world’s tallest building, the Burj Khalifa in Dubai.

Some cranes for construction are so large that it takes more than 100 trucks to bring the parts to put them together, Mr Doron said. Among other things, the cranes will lift 55-ton chillers for the new fabs.

Patrick Gelsinger, who became Intel’s CEO a year ago, is lobbying Congress to provide factory-building grants and equipment investment tax credits. To control Intel’s spending risk, he plans to focus on building fabulous “shells” that can be outfitted with devices to respond to market changes.

To counteract the chip shortage, Mr. Gelsinger must realize his plan to produce chips developed by other companies. But a single company can only do so much; Products like phones and cars require components from many suppliers, as well as older chips. And when it comes to semiconductors, no country can stand alone. Although encouraging domestic manufacturing may reduce supply risks somewhat, the chip industry will continue to rely on a complex global web of companies for raw materials, manufacturing facilities, design software, talent and specialized manufacturing.

Produced by Alana Celii

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