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Intel is spending $7.1 billion on new chip packaging facilities in Malaysia

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Intel Corp. is spending $7.1 billion on new chip packaging facilities in Malaysia, a major investment to ramp up its global footprint and address a crippling global chip shortage it expects to persist until 2023.

The company is earmarking more than 30 billion ringgit toward expanding its capacity in the country, Chief Executive Officer Pat Gelsinger told reporters Thursday. Part of that will bankroll a new packaging plant expected to begin production in 2024, he said.

The project marks a big bet on Malaysia, which is emerging as a global center for testing and assembling semiconductors. The U.S. chipmaker intends to shore up its capabilities in the island state of Penang, creating a sprawling complex that will serve industries from cars to electronics across Asia. 

It’s part of a global expansion as Gelsinger moves to staunch market share losses and customer defections stemming in part from stumbles in upgrading technology. Gelsinger took the helm of the largest American chipmaker in February with a mandate to take back leadership of the industry from Asian giants such as Taiwan Semiconductor Manufacturing Co. Intel will outline expansions in the U.S. and Europe next year, he said Thursday.

At the same time, years of global industry under-investment and a surge in Covid-era demand for computing devices have created an unprecedented shortage of the semiconductors needed in everything from autos to smartphones. Gelsinger, who said chip demand climbed 20% during the pandemic overall, expects the crunch to last till 2023.

Malaysia alone accounts for 13% of the world’s chip testing and packaging, a key step in readying semiconductors for cars, phones and other devices, and Penang has emerged as the nation’s electrical and electronics hub. More than half a million people were employed in the E&E industry in 2020, working with global chipmakers from STMicroelectronics NV and Infineon Technologies AG to Intel and Renesas Electronics Corp

The expansion of Intel’s facilities in Malaysia will create more than 4,000 positions for the company as well as over 5,000 construction jobs for local Malaysians, Trade Minister Azmin Ali told reporters. The nation approved 47 billion ringgit of investment — mostly foreign — in the E&E sector in the first half of the year versus 5 billion ringgit in the year-ago period, Azmin said.

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