Intel has struggled to shrink circuitry, key to making processors competitive and profitable.

Stephen Shankland/CNET

Intel plans to announce on Monday a $3.5 billion investment to upgrade a Rio Rancho, New Mexico, chip manufacturing plant. That spending, combined with $20 billion to build two new facilities in Arizona, is part of a major effort by the chipmaker to rejuvenate its manufacturing.

Intel confirmed the $3.5 billion upgrade, first reported on CBS’ 60 Minutes on Sunday. Intel manufacturing chief Keyvan Esfarjani plans to detail the plan at a press conference with New Mexico Gov. Michelle Lujan Grisham, New Mexico’s two senators, Martin Heinrich and Ben Ray Luj├ín, and Rep. Teresa Leger Fernandez, Intel said.

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Intel is happy with current efforts to drum up federal funding to help the US chip industry. Gelsinger said Intel also will invest more of its own money, too, instead of spending it on buying its own stock — a move that keeps shareholders happy but that doesn’t help research or operations.

“We will not be anywhere near as focused on buybacks going forward as we have in the past,” Gelsinger told 60 Minutes. “That’s been reviewed as part of my coming into the company, agreed upon with the board of directors.”

Intel led chipmaking progress for decades but fell behind Taiwan Semiconductor Manufacturing Co. (TSMC) in recent years. Investing in its new chipmaking plants, called fabs, is part of a major Intel effort to restore its competitiveness under its new chief executive, Pat Gelsinger. It’s also planning to build chips for others, a business called a foundry, and to rely on other chip foundries to build some of its own chips.

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The Silicon Valley company remains profitable, but it faces stiff competition on several fronts besides TSMC and the third major chipmaker, Samsung. All smartphone processors are members of the Arm family, including Apple’s A series. Apple also has split with Intel with its new M series of Mac processors. Amazon also has an Arm server processor for its Amazon Web Services, the cloud computing foundation that powers huge swaths of the Internet.

Intel also faces a smaller Arm rival called RISC-V that’s won interest from some notable chip startups. One, Tenstorrent, hired Jim Keller, formerly a high-profile Intel chip designer, as chief executive. Another, Esperanto Technologies, has revealed an AI chip design with more than 1,000 processing cores.

TSMC is spending billions of dollars on its new fabs, too, mostly in Taiwan but also Arizona. Gelsinger is bullish, though: “We believe it’s gonna take us a couple of years and we will be caught up,” he told 60 Minutes.

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