Intel will invest more than $28 billion to construct two new chip factories in Ohio, the company said on Friday, in a latest step to build out its contract manufacturing business and better compete with Taiwan Semiconductor Manufacturing Co.

Shares of the troubled chip firm rose nearly 2% in early trading. The stock has slumped more than 55% this year.

Intel's foundry business is central to CEO Pat Gelsinger's turnaround strategy, as the once-chipmaking king attempts to claw back the technological edge that it lost to TSMC, the world's largest contract chipmaker.

The big investment comes more than a month after Intel signed a multibillion-dollar deal with Amazon to build custom AI chips for the e-commerce giant's cloud services unit. The deal was seen as a major stamp of approval to Intel's money-losing foundry business.

The Santa Clara, California-based company said on Friday the initial phase of the project is expected to create 3,000 Intel jobs.

The chipmaker has had a tumultuous year as it suspended its dividend, slashed workforce and saw sudden resignation of a high-profile board member, while the slump in its share price threatened its place in the Dow Jones index.

(Reporting by Deborah Sophia in Bengaluru; Editing by Shilpi Majumdar)