$1 billion. That’s not pocket change—it’s Intel’s freshly revised forecast for revenue from its advanced chip packaging business, up from mere hundreds of millions just months ago.
Intel’s CFO Dave Zinsner dropped that bombshell. And it’s not hype; it’s tied to a dusty fab in Rio Rancho, New Mexico, revived after years of silence.
Raccoons. A badger. That’s what squatted in Fab 9 when Intel shut it down in 2007, amid a business slump. Fast-forward to 2024: $500 million from the CHIPS Act floods in. Machines hum again. Next door, Fab 11X joins the fray. Suddenly, this 200-acre site—built partly on a sod farm—is ground zero for Intel’s quiet growth spurt.
From Badger Den to Billion-Dollar Bet?
Packaging isn’t glamorous. It’s the unglamorous glue—literally—mashing chiplets (tiny chip pieces) into custom powerhouses. Think AI accelerators, where Google and Amazon crave bespoke silicon but outsource the fiddly bits.
Intel’s Foundry arm handles this. And it’s exploding. CEO Lip-Bu Tan calls it a “very big differentiator.” Zinsner? He pegs packaging revenue hitting before wafers even ramp.
“Ironically, the more interesting part of the Foundry business today,” Zinsner said at Morgan Stanley’s conference, “close to closing some deals that are in the billions of dollars per year, in terms of revenue on packaging.”
Billions per year. Per customer? Sources whisper Google and Amazon in talks. Both design custom chips—TPUs, Graviton—but fab elsewhere. Intel wants in.
Spokespeople stonewalled. Google’s Lee Fleming: no comment on suppliers. Amazon’s Doron Aronson: same. Intel? “We don’t discuss specific customers.”
But here’s my unique take—the historical echo screaming loudest. Remember the 1980s? Intel dominated memory chips, then ignored packaging innovations. Japan ate their lunch. TSMC rose on foundry+packaging mastery. Intel’s repeating history, but smarter this time: government cash cushions the fall. Or the leap?
Why Does Packaging Suddenly Matter for AI Developers?
AI chews power. Custom chips—chiplet stacks—deliver it efficiently. TSMC owns 90%+ scale, but Intel’s pitching differentiation: Foveros, EMIB tech stacking dies 3D-style.
Short para. Brutal truth: Intel’s late.
Yet, demand surges. Hyperscalers design in-house (Apple’s M-series, Broadcom for Meta), but packaging complexity? Outsource goldmine. Intel’s fabs idle? Perfect for low-volume, high-mix runs TSMC scoffs at.
Zinsner eyes 40% gross margins—same as Intel’s CPUs. Ambitious. Analyst Jim McGregor doubts: “Packaging is not as easy as saying ‘I want to run 100,000 wafers per month.’ It really comes down to whether Intel’s fabs can make deals.”
Malaysia signals yes. PM Anwar Ibrahim announced expansions in Penang—Intel’s 1970s outpost. Foundry head Naga Chandrasekaran: first phase starts soon, assembly/test for packaging surge.
Intel confirms: “amid rising global demand.”
Is Intel’s CHIPS Act Gamble Paying Off Already?
Split Intel: product side (CPUs for PCs, servers). Foundry side (making others’ chips). Packaging bridges both—uses existing plants, sidesteps bleeding-edge nodes where Intel lags.
CHIPS Act? $500M jumpstarts Rio Rancho. Billions more pledged. But strings attach—U.S. manufacturing mandates. Intel’s comeback pitch: save American semis from Taiwan quake.
Skepticism baked in. CEOs churned. Fabs started, stopped. Investors twitchy.
But packaging? Lower barriers. No $20B mega-fabs needed. Just skilled hands, custom tools. If Google/Amazon ink, revenue snowballs. Prediction: $1B by 2026, if deals close—reshaping Foundry from loss-leader to profit beast.
Corporate spin? Tan’s “differentiator” smells promotional—Intel trails TSMC’s CoWoS by miles. Yet, AI frenzy ignores that. Niche wins possible.
Look. Expansions scream confidence. Chandrasekaran, new Foundry boss, tells WIRED (exclusively, they say): plans rolling.
Challenges loom. Scale. Yield. TSMC’s shadow. But raccoons gone, badgers booted—this bet’s alive.
Single sentence: Billions await, if Intel delivers.
And in AI’s chip wars, delivery’s everything.
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Frequently Asked Questions
What is Intel’s advanced chip packaging?
It’s stacking multiple chiplets into one high-performance package, key for AI chips needing dense compute without huge single dies.
Intel packaging revenue forecast 2025?
CFO says well north of $1B soon, with multi-billion annual deals pending—faster than core wafer fab revenue.
Who are Intel Foundry’s packaging customers?
Talks with Google and Amazon rumored; both seek custom AI silicon packaging amid TSMC dominance.
