In Rio Rancho, New Mexico, a sprawling Intel facility covering more than 200 acres has undergone a dramatic transformation. Originally built in the 1980s on a former sod farm, this site saw one of its key fabrication plants, Fab 9, shut down in 2007 as Intel struggled. For years, the idle space reportedly hosted wildlife like raccoons and a badger. That changed in January 2024, when Intel reactivated Fab 9 after pouring billions into upgrades, including $500 million from the U.S. CHIPS Act. Today, Fab 9 and its adjacent Fab 11X form a critical hub for Intel’s expanding focus on advanced chip packaging.
Advanced packaging involves assembling multiple smaller components, known as chiplets, into a single integrated chip. This approach allows for more specialized and powerful processors, which is becoming increasingly vital as artificial intelligence drives demand for diverse computing solutions. Intel’s packaging operations are housed within its Foundry division, and over the last six months, the company has indicated that this segment is experiencing rapid growth.
Intel’s push into packaging sets it in direct competition with Taiwan Semiconductor Manufacturing Corporation (TSMC), which currently dominates the market in terms of production scale. However, with nearly every major tech firm exploring custom chip designs to power AI applications, Intel sees an opportunity to secure a larger share of this lucrative sector. During a quarterly earnings call in January, Intel CEO Lip-Bu Tan emphasized that the company’s packaging capabilities serve as a “very big differentiator” from rivals.
Chief financial officer Dave Zinsner, speaking on the same call, noted that packaging revenue is expected to materialize “even before we start to see meaningful wafer revenue.” He also revealed that over the past 12 to 18 months, he has adjusted his revenue forecasts for this business from hundreds of millions of dollars to “well north of $1 billion.” This upward revision underscores Intel’s confidence in packaging as a key revenue driver amid the AI boom.
