However, this race requires a large investment and could cause the US tech giant to see negative cash flow this year. Intel CEO Pat Gelsinger said during last week’s annual investor meeting that demand for automotive chips is expected to nearly double to $115 billion by 2030. This has given the company a boost. established a chip-making unit dedicated to automakers.
Intel is ramping up its chip manufacturing business to meet growing semiconductor demand as a global chip shortage affects many industries, particularly auto manufacturers. .
|Intel is ramping up its chip manufacturing business to meet growing semiconductor demand|
“The auto market is going through a downturn, supply chains are disrupted, while electric and autonomous vehicles are demanding new semiconductor solutions,” said Randhir Thakur, President of Intel Foundry Services (Intel Foundry Services). IFS), said.
The launch of the automotive chip unit was announced just days after Intel would buy Israeli chipmaker Tower Semiconductor for $5.4 billion. Intel CFO Dave Zinsner said the company will continue to look for more mergers and acquisitions (M&A) targets such as Tower Semiconductor to increase its scalability, in addition to increasing capital spending over the next few years to increase its scalability. driving the natural growth of the chip business.
“We just have a bigger belief than anything else that chip manufacturing is the business we should be in,” Zinsner said at Intel’s annual investor event.
A global shift to electric vehicles could mean even higher demand for chip-making services, as electric vehicles require more semiconductors than traditional cars, including everything from microprocessors to microprocessors. controls to sensors and processors. Key automotive chip developers such as Infineon, Bosch, NXP, STMicroelectronics, and many others now manufacture some of their chips themselves, but also outsource some of the outsourcing from contract chipmakers such as Taiwan Semiconductor Manufacturing Co. TSMC), Globalfoundries, United Microelectronics and Powerchip Semiconductor Manufacturing Co. These companies are only just beginning to prioritize production of automotive-related chips, due to unprecedented global shortages and pressure from governments to meet automakers’ demands.
Globalfoundries has doubled its automotive chip production by 2021. TSMC also increased its production of automotive-related chips by 60%. Intel projects full-year 2022 revenue at $76 billion, lower than the $79 billion it announced in 2021, in part due to supply chain constraints. Due to heavy spending, Intel is expected to end the year with negative free cash flow of between $1 billion and negative $2 billion, compared with positive free cash flow of $11.3 billion in 2021.
It is known that Intel’s chip processing business brought in $ 800 million last year. The acquisition of Tower Semiconductor will help Intel expand its chip business in the smartphone, industrial equipment, and automotive electronics markets, while providing the geographic diversification the giant has American technology is looking for.
Tower Semiconductor operates a total of eight chip manufacturing sites across Israel, the United States, and Japan, including three joint ventures with Panasonic. “As Tower operates divisions in Asia, EMEA (Europe, Middle East, and Africa) and North America, this acquisition is in line with Intel’s current strategic goal of reducing asymmetric concentration supply chain of the chip manufacturing industry in Asia. It will give Intel more flexibility in allocating production capacity, further reducing the risk of potential supply chain disruptions arising from geopolitical conflicts.” TrendForce wrote in a report on February 16.