Intel’s Arizona Plans Are FABulous

Flexing its considerable financial muscle, Intel is sinking $3 billion into a new chip manufacturing plant in Chandler, Arizona.

The 300-mm wafer fabrication plant is expected to produce by the second half of 2007. It will be the sixth facility of its kind owned by Intel and focused on the company’s most cutting edge 45 nanometer process technology for future computing platforms.

Currently, most chips are produced using a 90-nanometer process, with 65-nanometer designs on track to debut later this year. Intel’s decision to invest billions of dollars in a new, U.S.-based plant was a positive counterpoint of the trend to outsource and offshore production in so many areas of the U.S. economy.

“Forty-five nanometer is the most complicated production done anywhere in the world,” said Bob Baker, senior vice president of Intel’s Technology and Manufacturing Group. Baker said the fact Intel already has “Fabs,” in Arizona as the chip plants are called, was a factor in the decision to build in Chandler. There, the company can leverage the knowledge of staff already there. Intel has another 300-mm Fab in Chandler under construction that’s scheduled for completion later this year.

Manufacturing with 300-mm wafers (about 12 inches in diameter) greatly increases the ability to produce semiconductors at a lower cost compared with more widely used 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 bigger wafers lower the production cost per chip while diminishing overall use of resources. Intel said three-hundred-mm wafer manufacturing will use 40 percent less energy and water per chip than a 200-mm wafer factory.

Intel would not confirm wire story reports over the weekend that it was planning a $4 billion plant in southern Israel. Prime Minister Ariel Sharon reportedly told his cabinet on Sunday that Intel would build a manufacturing plant there. “No decision has been made about Israel,” Baker said in a conference call announcing the new Fab.

Separately, Intel said it will invest $105 million dollars to convert an existing inactive wafer fab in New Mexico to a component temporary test facility. The project will provide additional test capacity to the company’s factory network for the next two years and will result in an additional 300 jobs at the New Mexico site during that period.

Baker said Intel picked Chandler for a number of reasons including tax incentives, and the State’s highly skilled workforce. The new Fab will be about 1 million square feet with 184,000 square feet of clean room space. The project is expected to create up to 1,000 new Intel jobs at the Arizona site over the next several years.