Intel’s John Kalvin: Chip Capacity Investments Will ‘Secure Our Partners’ Growth For Decades’

‘I can’t imagine a bigger and more meaningful investment to help our partners grow than to make these big investments in long-term capacity and to build out this globally resilient supply chain,’ John Kalvin, Intel’s global channel chief, told CRN.

As supply chain disruptions continue to plague the channel and the technology industry as a whole, Intel global channel chief John Kalvin said investments the chip giant is making to boost manufacturing capacity in the U.S. and elsewhere around the globe will have a significant impact on partner growth.

“I can’t imagine a bigger and more meaningful investment to help our partners grow than to make these big investments in long-term capacity and to build out this globally resilient supply chain,” John Kalvin, vice president and general manager of global partners and support at Intel, told CRN.Intel’s aim is to reset the balance of where its semiconductors are built, he said.

[Related: Chain Reaction: How Supply Shortages Are Shaking Up The Channel]

“If you roll back the clock, maybe even before my time at Intel, say 30 years ago, 80 percent of those semiconductors were built in the U.S. and Europe,” he said. “Now, it’s essentially completely flipped. About 80 percent of the semiconductors in the world are built in Asia and just over 20 percent of them are built in Europe and in the U.S.”

Intel’s mission, he said, is over time to balance chip production with 50 percent in Asia and 50 percent in the U.S. and Europe.

In an interview with CRN about a week after the company broke ground on a $20 billion chipmaking facility in Licking County, Ohio, Kalvin discussed Intel’s investments in the construction of chip manufacturing plants and how it is betting big on the partner ecosystem with those investments.

An edited version of the conversation follows.

Supply chain issues have been a problem since the start of the pandemic. How is Intel dealing with that now versus the long term?

We’ve made investments into a variety of manufacturing site expansions and projects in New Mexico, Arizona, Oregon, Costa Rica, Israel and Ireland. So, it is not just about the new $20 billion announcement in Ohio, which will take some years before it is operational.

We have been aggressively increasing our investments over the last couple of years. We had been spending around $14 billion in Capex, and just [in our] last earnings call in July we forecast net Capex at $23 billion.

We have been working hard to improve product output over the next few years, and we will have a ton of this capacity coming online to make sure we are meeting customer needs.

How long will it take to get to that 50-50 split?

Time will tell. Think about this over a fairly long horizon, think about end of the decade. The CHIPS Act [legislation signed in August to boost domestic high-tech manufacturing] is a portion of the investment. But just look at the Intel portion: a $100 billion in the U.S. and up to 80 billion euros over the next decade. This is the time horizon through which our ambition is to get to that kind of 50-50 mark. On top of that, you have government investments that are being made here in the U.S. but also in Europe.

Why does this matter to channel partners?

A big focus for us is how do we help our partners grow. I can’t imagine a bigger and more meaningful investment to help our partners grow than to make these big investments in long-term capacity and to build out this globally resilient supply chain. Intel’s investment to build capacity will really secure our partners’ growth for decades. Their businesses are predicated on a robust supply of semiconductors over time in order to grow.

Does Intel work with competitors to help solve the supply chain problem?

Not directly. But for example, we had a recent collaboration to build announcement with MediaTek. Some might view them traditionally in the competitive arena for Intel. Nvidia has made public comments about considering Intel for foundry. Many of the fabless companies that might have traditionally been considered competitors might also end up customers as they think about where’s the right place to have their semiconductors built long term.

Partners tell us they want vendors to communicate more with them. Is there a strategy to talk more with partners about supply chain issues?

We have actually done a fair bit of work for our customers and partners to really understand the broader constraints in the semiconductor supply chain and the technology supply chain upstream. [We want] to make sure our customers or partners have the totality of the components that they need to build products with Intel inside … [and] to share our perspective on what we’re seeing and increasing the communication on the Intel components. But more broadly, [sharing] our perspective has definitely been a part of what we’ve been doing in that space.

Shane Snider contributed to this report.