The Packaging Equation

Advanced semiconductor packaging is similar to die fabrication in some respects and different in others. Just like die fabrication, advanced packaging requires silicon manufacturing for the interposers used in 2.5D and 3D packaging; investment into new materials and equipment with each generation, even if not at the same scale; and advanced cleanroom facilities for the manufacturing processes. However, packaging also requires some customization in the process and equipment, as requirements can vary greatly by application, product specifications and even the customer.

Like its fabrication footprint, Intel also has advanced packaging facilities worldwide. Intel’s Assembly and Test Technology Development (ATTD) is located in Chandler, Arizona, and volume manufacturing is in Oregon, Malaysia, and New Mexico. The sister facilities located in Penang, Malaysia and Rio Rancho, New Mexico, are the advanced packaging facilities responsible for most of Intel’s EMIB (Embedded Multi-die Interconnect Bridge) used for 2.5D packaging and Foveros 3D die-stacking packaging.

The Rio Rancho facility is unique due to its history and capabilities. The facility first opened in 1980 and eventually became one of the most advanced semiconductor manufacturing facilities in the world by the late-1990s/early-2000s, only to have portions mothballed and put up for sale a little more than a decade later. The announcement of Intel Foundry in 2021 marked a pivotal shift, focusing the facility on advanced semiconductor packaging, and it is the most advanced U.S.-based integrated packaging facility. The entire facility is now being used for manufacturing and test, and the 218-acre facility has room for future expansion. Most recently, Intel began offering silicon photonics manufacturing at Rio Rancho to its external foundry customers. Rio Rancho is also likely to be not just the first Intel site, but the first site in the world for volume manufacturing of glass substrates, which is currently available only on a pilot line in Chandler.

Packaging Is Key To Intel Foundry

Jim McGregor, Founder and Principal Analyst at Tirias Research, who has worked at and visited numerous Intel facilities throughout his career, recently had the opportunity to tour Intel’s Rio Rancho facility. According to Jim, the most interesting part of the tour wasn’t the facilities; it was the mindset. “It didn’t feel like walking into an Intel facility. It felt like walking into a true semiconductor foundry that is willing to do anything for its customers, which includes just specific steps of the packaging process to a complete end-to-end solution." Jim also noted that “when the staff referenced Intel, it was typically in the context of being just another customer. Although they could not provide details on other customers, it’s very clear that they have several large external customers, and they continue to ramp up in terms of space, equipment and personnel to support their growing customer base.”

According to reports from channel sources, AWS and Cisco are current customers of Intel Foundry’s advanced packaging services, while Apple, Google, Microsoft, Nvidia and Tesla are reportedly engaged in discussions regarding potential collaborations. In addition, Intel Foundry has established strategic partnerships with SK Hynix for HBM memory and Amkor Technology, a leading outsourced semiconductor assembly and test (OSAT) that is expanding its Arizona capacity, presumably to support the new local Intel and TSMC fabs.

According to Intel, Intel Foundry should break even in 2027 and be profitable by 2030. Even though the company does not break out financial figures for fabrication and packaging, Tirias Research believes the Packaging and Test Business Group is already profitable and will be a major contributor to Intel Foundry's financial strength through 2030. On Intel’s Q4 2025 earnings call, CFO David Zinsner said early customer engagements suggest that many advanced packaging opportunities could be well north of $1 billion. Jim indicated that “the advanced packaging arm of Intel Foundry is where I would expect the fabrication arm, to be in a few years.”

Future Outlook

Advanced packaging has become strategically critical in the AI era because performance scaling increasingly depends on integrating multiple compute, memory, networking and photonics dies into a single package. As reticle limits, power density, yield constraints and HBM integration challenges grow, packaging is becoming as important as transistor scaling itself. Intel’s leadership in advanced packaging indicates that the U.S. can, and will be, competitive in all aspects of semiconductor manufacturing.

More than anything, the Packaging and Test Business Group provides a glimpse into the future of Intel Foundry. Packaging may be the last step in the semiconductor manufacturing process, but it is the first step in Intel Foundry becoming an industry-leading foundry. It also points to the future in terms of both fabrication processes and packaging, which at this point will include silicon photonics, glass substrates and future Intel process nodes, including Intel 14A. Even if Intel won’t admit it's fully committed to Intel 14A, Tirias Research believes that it is. While it is still unclear if Intel Foundry will remain a part of Intel after it reaches profitability, it is increasingly evident that the business is positioned to become a major force in the global semiconductor industry.