Intel Corp (INTC)

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New Intel Factory To Open

Tuesday, October 22, 2002

New Intel Factory To Open

By Aaron Baca
Journal Staff Writer
After more than $2 billion and two years of construction, Intel's newest computer chip factory - billed as the most advanced high-volume chip plant in the world - is scheduled to come on line Wednesday.

The Fab 11x factory near Rio Rancho practically guarantees Intel's lead as the biggest, most advanced chip maker in the world, said Intel vice president of manufacturing Bob Baker on Monday.

"We felt like we had an opportunity to lead the industry and that required us to invest pretty heavily," Baker said, talking about Intel's steady level of spending for new manufacturing technology during the past two years.

"This factory (Fab 11x) should allow us the ability to transition through several technologies."

Fab 11x adds roughly 200,000 square feet of clean-room space to the Intel New Mexico site. With Fab 11x, Intel now has clean-room space equal to about six football fields.

The factory could add hundreds of workers to Intel's 5,500-person New Mexico work force. Already, more than 500 people have been hired because of the new plant.

The company has planned several grand-opening activities for the factory's ceremonial opening Wednesday, including visits by some of Intel's top executives and most of New Mexico's congressional delegation.

Intel president and chief operating officer Paul Otellini is expected to be on hand and the company will show off the first wafer made in the new factory as part of the opening ceremonies, said Intel spokesman Terry McDermott.

It will be several months before Fab 11x is running at full capacity; and that timing will depend on market conditions, Baker said.

Like many companies, Intel has been affected by the economic slump that has gutted the technology sector. Profits have been off and revenues stagnant.

But Intel has continued to invest in plant upgrades. On average, Intel spends more than $2 billion each quarter for capital improvements.

Industry analysts have at times questioned Intel's massive annual capital spending budget during poor economic times.

But Intel's chief executive officer Craig Barrett has said repeatedly that Intel's philosophy for rebounding from a recession is to spend its way out.

Fab 11x is, perhaps, the company's best example of that philosophy, Baker said.

What makes Fab 11x the crown jewel of Intel's international string of factories is what's inside.

It is the first Intel factory to use 12-inch, or 300 millimeter, silicon wafers and 130 nanometer technology. The first measurement refers to the size of wafers onto which Intel etches chips. The second refers to size of the circuitry on each individual chip.

"The combination ... gives us some advanced implementation over the competition," Baker said.

The factory will be able to pump out more chips at a low price than probably any other factory in the world, he said.

Fab 11x will be automated, using robotic wafer handlers and a specialized monorail system that will transport wafers within the factory.

"As an industry we're shooting for a 30 percent cost reduction with this technology," Baker said.

Intel's Fab 11x is not an entirely new factory. It was built as an addition to the existing Fab 11 plant built in 1995. In addition to new manufacturing space, the Fab 11x project includes a four-story office building and a new chip-testing center.

Together, the two chip-making lines will produce nearly every processor in Intel's product lineup, including Pentium 5, Flash Memory and other advanced chips.

Since 1990, Intel has invested $4.5 billion in construction and equipment at its New Mexico factory.

The Fab 11x expansion was paid for using about $2 billion in industrial revenue bonds.

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