Intel planning on further bolstering foundry business to alleviate global chip demand

CEO Pat Gelsinger said the company is looking to 'build additional capacity to support both internal and IFS growth'

Intel has outlined plans to further expand its Foundry Services (IFS) business, with CEO Pat Gelsinger predicting that it will take "another one to two years" for the industry to catch up fully with the demand for key components.

On an earnings call announcing Intel's results for Q2, which saw the company outperform expectations with a two per cent increase in non-GAAP revenue to $18.5bn, Gelsinger said that Intel was planning to "build additional capacity to support both internal and IFS growth" and is "taking action today to find innovative ways to help mitigate industry constraints".

Gelsinger has been among the most outspoken CEOs on the issue of global supply shortages, calling for more production to take place in the United States, with Intel spending $20bn on two new chip plants in Arizona while also planning to build another in Europe.

In March, it announced its IFS business expansion aimed at bolstering its chip-making capabilities to alleviate global shortages, and has also recently been linked with a move to buy chip manufacturer GlobalFoundries for $30bn.

Gelsinger did not comment on that rumour specifically but would not rule out acquisitions as a means of meeting the high demand for components.

"There's a lot of excitement in the marketplace with 100 plus customers in the pipeline already, and you can expect to see great things in this area of a new and exciting business," Gelsinger said.

"Along with our $20bn fab investment in Arizona, and $3.5bn advanced packaging investment in New Mexico, we plan to build additional capacity to support both internal and IFS growth. We expect to announce our plans for our next US and European sites by the end of this year.

"At this point, we would not say that M&A is critical, but nor would we rule it out. Our view is that industry consolidation is very likely. We just simply view that smaller players simply won't be able to keep up, and foundries without leading edge capabilities will be left behind.

"And we're continually seeking ways to accelerate our plans with IFS. If an acquisition can help, we will certainly not rule it out."

Gelsinger said he would release further details of the company's plans for its IFS business on Monday, while he also warned supply shortages in Q3 would be "particularly acute" for its clients.