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Intel to build $3b processor plant in Arizona

Intel Corp., the world's largest chip maker and soon to be Apple supplier, will build a new $3 billion processor manufacturing facility at its site in Arizona to introduce the most-advanced technology into its factories, the company said on Monday.

Construction on the new $3 billion facility, designated Fab 32, will begin immediately. It will be the first Intel facility to produce microprocessors using a 45 nanometer process when it begins churning out the chips in the second half of 2007.

Fab 32 will become Intel's sixth 300-mm wafer facility, producing wafers of about 12 inches in diameter, the Santa Clara, Calif.-based company said in a statement. It will be about 1 million square feet with 184,000 square feet of clean room space. Over the next several years, the project will create up to 1000 new Intel jobs in addition to employing 3,000 skilled trades staff to work on constructing the facility.

"This investment positions our manufacturing network for future growth to support our platform initiatives and will give us additional supply flexibility across a range of products," said Intel chief executive Paul Otellini. "For Intel, manufacturing is a key competitive advantage that serves as the underpinning for our business and allows us to provide customers with leading-edge products in high volume."

Intel currently operates four other 300-mm fabs that provide the equivalent manufacturing capacity of about eight 200-mm factories. Those factories are located in Oregon, Ireland and New Mexico. The company also has an additional 300 mm fab currently under construction in Arizona (Fab 12) scheduled to begin operations later this year, and one expansion in Ireland (Fab 24-2) scheduled to begin operations in the first quarter of next year.

Officials in Israel and India have also recently indicated that the company plans to build factories or other facilities in their countries, but Intel has refused to confirm the news, according to the Associated Press.

By manufacturing with 300-mm wafers Intel hopes to dramatically increases its ability to produce semiconductors at a lower cost compared with more widely used 200-mm wafers, which are about 4 inches smaller in diameter. The total silicon surface area of a 300-mm wafer is 225 percent, or more than twice that of a 200-mm wafer, increasing the number of individual microprocessors per wafer by 240 percent.

Larger wafers lower the production cost per chip while diminishing overall use of resources, the company said, allowing it to use 40 percent less energy and water per chip than a 200-mm wafer factory.

The Fab 32 facility is part of Intel's plan to increase capital spending by 55 percent this year to $5.9 billion, up from $3.8 billion in 2004. The company, which has just begun to introduce 65-nanometer technology into production, is striving to maintain its lead in the $219.9 billion semiconductor industry by introducing the latest production technology ahead of its rivals.

Separately, Intel said today that it will invest $105 million 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.