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Intel's $2 Billion Dustup in the Desert

SAN JOSE, Calif. -- Intel Tuesday said it will spend $2 billion to convert its 200-mm wafer fabrication facility located in Chandler, Arizona to a 300-mm wafer fab.

The renovations are expected to begin in the first half of 2004 with production scheduled to begin in late 2005. The converted fab will start up production on 65-nanometer process technology.

When it's finished, the Chandler plant will become Intel's fifth 300-mm wafer facility. The company currently has two 300-mm fabs in operation; one in Hillsboro, Ore., the second in Rio Rancho, N.M. Two other 300-mm facilities are under construction. One in Oregon will begin operations later this year, and a facility currently under construction in Ireland is scheduled to begin operations in the first half of 2004.

"This technology greatly improves our capital efficiency by giving us more than twice the capacity at significantly lower costs," said Intel senior vice president Bob Baker. "Additionally, by reusing an existing 200-mm factory we save additional capital and take advantage of the highly skilled workforce we already have in place."

The 300-mm wafers certainly fall into line with Santa Clara, Calif.-based Intel's production plans. CEO Craig Barrett outlined the company's ever shrinking processor size. Barrett said the company was on track to release 65-nanometer chips (nm) by 2005, 45nm ones by 2007 and 32nm in 2009.

Manufacturing with 300-mm wafers (about 12 inches in diameter) dramatically increases the ability to produce semiconductors at a lower cost compared with the current standard 200-mm (eight-inch) wafers. The total silicon surface area of a 300-mm wafer is 225 percent (or more than twice) that of a 200-mm wafer, and the number of printed die (individual computer chips) is increased to 240 percent. The thinking is that bigger wafers lower the production cost per chip while diminishing overall use of resources. Three-hundred-mm wafer manufacturing will use 40 percent less energy and water per chip than a 200-mm wafer factory.

Separately, Intel said it plans to sell 524 acres of land in Forth Worth, Texas. The land was purchased in 1997 as part of a planned manufacturing facility. Intel said the property is no longer part of the company's future plans.