Intel has made new progress on its U.S. fab expansion, with the Arizona facility set to begin production in 2028 as surging AI chip demand supports the capacity expansion.
Intel announced on Wednesday that its U.S. fab expansion plan, which has been delayed multiple times, has made significant progress. The new facility in Arizona has entered the critical equipment installation phase, and construction of the chip manufacturing site in Ohio is also advancing. As demand for artificial intelligence (AI) data center processors grows rapidly, Intel is accelerating the expansion of its domestic U.S. manufacturing capacity to strengthen its advanced chip-making capabilities and boost its foundry business.
Intel Vice President Naga Chandrasekaran said in an article posted on the company's official website that Fab 62, near Phoenix, Arizona, is undergoing installation of production equipment, a critical step before the facility begins operations. Intel expects the plant to start operating in early 2028.
Meanwhile, Intel's chip manufacturing facility in New Albany, Ohio, has also made progress, having completed the installation of its first large roof truss. The milestone marks a renewed push forward on the long-delayed project.
Intel is building two advanced fabs at the Ocotillo campus south of Phoenix. Fab 52 is already in operation, while Fab 62, next door, is nearing completion of its facility construction and will soon enter the equipment installation phase. The company also operates other facilities in the area that produce chips using more mature process technologies.
For chip manufacturers, installing production equipment typically represents the most capital-intensive phase of fab construction. The unit purchase price of some advanced semiconductor manufacturing tools can reach several hundred million dollars, so the period from completion of a facility's construction to equipment installation often requires substantial capital investment.
Intel's recent progress on equipment installation at Fab 62 indicates that the company is preparing to expand its chip manufacturing capacity.
The development also reflects a shift in Intel's capital expenditure strategy under CEO Lip-Bu Tan. Since assuming the role in March 2025, Tan has emphasized controlling capital spending and avoiding overinvestment when market demand remains uncertain. He has previously said that large-scale construction projects, including the Ohio fab, would proceed only if the company is confident that future orders will be sufficient to support them. With the Arizona and Ohio projects regaining momentum, the market may read this as a sign of Intel's growing confidence in future chip demand.
Under former CEO Pat Gelsinger, Intel vigorously promoted the development of advanced semiconductor manufacturing capacity in the United States, aiming to use expanded domestic fabs to reassert its leading position in global chip manufacturing. The Ohio project was once planned to become the world's largest chip manufacturing hub and was seen as a key symbol of Intel's manufacturing revival. In 2022, former U.S. President Biden visited the site to rally support for its construction plans.
However, as Intel gradually lost its lead in advanced process technology over the past decade and failed to attract enough external foundry customers, its massive expansion plans lacked sufficient order support, causing multiple projects to face prolonged delays.
In the semiconductor industry, companies typically build the main fab structure first. Once customer demand and the outlook for capacity utilization become clearer, they procure and install costly manufacturing equipment, which mitigates the risks of idle capacity and capital investment.
Although Intel has not yet announced securing a large number of representative external foundry customers, demand for its own chip business is improving markedly. As AI services gain rapid traction, demand for data center server processors continues to grow, substantially increasing orders for Intel's related products. The company is now struggling to fully meet customer demand.
This shift provides more direct commercial support for Intel to expand its manufacturing capacity and is expected to ease market concerns about the return on its fab investments.
On the capital expenditure front, Intel announced in July that it would increase investment in new factory construction and production equipment, with the related budget expected to reach approximately $20 billion by 2026, higher than previously anticipated. The company also forecasts that capital spending will grow significantly further in 2027.
Still, Intel's investment scale lags significantly behind the world's leading semiconductor manufacturers. According to Wall Street forecasts, Taiwan Semiconductor (TSM.US), the global leader in foundry services, is expected to spend approximately US$60 billion on capital expenditures, well above Intel. South Korea's Samsung Electronics is also investing far more than Intel in semiconductor manufacturing. Despite its efforts to accelerate advanced manufacturing and regain a leading position in the global semiconductor race, Intel will need to keep committing substantial funds and make tangible progress in advanced process technologies, customer expansion, and capacity utilization.