Intel will invest $3.5 billion to equip its Rio Rancho, New Mexico chip fab to produce semiconductors using the chipmaker’s Foveros package technology, which it sees as a key differentiator as it enters the foundry services market.

“Intel Foveros technology allows us to build processors in an entirely new way,” said Keyvan Esfarjani, Intel SVP and GM of manufacturing and operations, during a press conference Monday. “With Foveros, compute tiles are stacked vertically rather than side by side to pack more transistors into a given area and deliver breakthrough products that meet the diverse needs of our customers around the world.”

According to Esfarjani, this technology is a critical component of Intel’s recently announced Integrated Design Manufacturing 2.0 (IDM 2.0) initiative, which seeks to not only invest in the chipmaker’s foundry network but to open those same foundries to outside customers.

Intel CEO Pat Gelsinger announced IDM 2.0 in late March alongside a new business unit, Intel Foundry Services, which will oversee contract manufacturing. The chipmaker initially announced a $20 billion investment into two new Arizona chip fabs, and teased additional foundry announcements in the U.S. and Europe later in the year.

Now, in addition to building additional capacity, Intel plans to retrofit existing foundries to suit its goals.

“It’s worth nothing that $3.5 billion is New Mexico’s single largest investment economically by a private sector company to date,” Gov. Michelle Lujan Grisham said during the press conference.

Upgrades to the Rio Rancho facility, which will expand the foundry's footprint by nearly 40%, are expected to create 700 additional new “high-tech” jobs, 1,000 construction jobs, and 3,500 state and community jobs over the course of the multi-year project.

The campus currently employs approximately 1,800 and is responsible for Intel’s Optane persistent memory, silicon phonics, and Embedded Multi-die Interconnect Bridge (EMIB) technology.

The project is slated to begin later this year.

The news comes amid a global chip shortage that has already hobbled the automotive industry, and just days after Intel CEO Pat Gelsinger entered into talks with European Commissioner Thierry Breton regarding the prospects of a European Union-based foundry.

Gelsinger has reported asked for approximately $10 billion in subsidies from EU member countries, according to a Politico report. However, Intel has denied these claims, stating that “with regards to EU semiconductor incentives, Intel has not requested a specific amount.”

Unless the cost of constructing a foundry in Europe differs demonstrably from the U.S., this would effectively mean Intel is asking EU leaders to pay for the foundry in its entirety.

But Intel isn’t the only foundry operator looking to expand its footprint. Rival chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) announced a $12 billion Arizona chip fab last spring and is now rumored to be planning five more U.S.-based foundries.

Meanwhile, foundry operator Samsung Electronics, second only to TSMC, is investigating a $10 billion to $17 billion fab in Austin Texas, which would produce wafers based on the company’s forthcoming 3-nanometer manufacturing process.