Sixteen miles north of Albuquerque, in Rio Rancho, New Mexico, an Intel chip plant sits on more than 200 acres of land. The site was established in the 1980s, part of it built on top of a sod farm. In 2007, as Intel’s business faltered, operations in one of the key fabs, Fab 9, came to a halt. Employees say families of raccoons and a badger took up residence in the space.

Then, in January 2024, the dormant fab was booted up again. Intel funneled billions into the facility, including $500 million it was granted from the US CHIPS Act. Now, Fab 9 and its neighbor, Fab 11X, are critical infrastructure for one of Intel’s quietly fast-growing businesses: advanced chip packaging.

Packaging involves combining multiple chiplets, or smaller components, onto a single, custom chip. Over the past six months, Intel has been signaling that its advanced packaging business, which operates within the Foundry chip-making arm of the company, is having a growth spurt. The company’s efforts around this have it going head-to-head with Taiwan Semiconductor Manufacturing Corporation, which far surpasses Intel’s production in terms of scale.

But in an era where AI is driving demand for all kinds of computing power, and leading nearly every major tech company to consider making its own custom chips, Intel thinks this effort can help it grab a bigger slice of the AI pie. During a quarterly earnings call in January, Intel CEO Lip-Bu Tan claimed that Intel’s packaging is a “very big differentiator” from competitors. Chief financial officer Dave Zinsner said on the same call that the company expects to see revenue from packaging “come in even before we start to see meaningful wafer revenue.” Zinsner said he had revised his packaging revenue projections over the past 12 to 18 months, from hundreds of millions of dollars to “well north of $1 billion.”