Fri, Oct 26, 2007 - Page 11 News List

Intel opens US$3 billion chipmaking factory in US

PRESSURE Rival Advanced Micro Devices has its own factory plans, but Intel is leading the way with a new facility using 45-nanometer chipmaking technology

AP , SAN FRANCISCO

In the latest display of its manufacturing might, Intel Corp is opening a US$3 billion factory in the US, widening its lead over smaller rival Advanced Micro Devices Inc (AMD) in the industry's switch to a new chipmaking technique.

The new facility in Arizona will be Intel's first plant dedicated to churning out microprocessors -- the brains of personal computers and servers -- with an average size of 45 nanometers, or 45 billionths of a meter.

The transistors on such chips are so small that more than 30 million can fit onto the head of a pin.

How small they are is critical to the fight between Intel and AMD because smaller features open more room for transistors on a single slice of silicon, boosting performance while lowering manufacturing costs.

The new processors are also made with materials that reduce the amount of electric current escaping from transistors, a major problem as chip parts shrink to the atomic scale.

Intel is at least six months ahead of AMD in the transition to the new chipmaking method.

Intel and AMD currently make their most advanced chips on 65-nanometer technology, and both companies are spending heavily to outfit their factories with the cutting-edge equipment and technologies needed to make 45-nanometer chips.

Intel's new factory, with more than 1,000 workers, is so big that more than 17 football fields could fit inside it.

Its products will go on sale on Nov. 12.

AMD is aiming to roll out chips based on its own new technique -- developed in a partnership with IBM Corp -- in the middle of next year but has not provided more specifics.

Intel is drawing on its deeper financial resources to fund its more rapid changeover.

The company, whose US$150 million market value is 21 times bigger than AMD's, plans to spend up to US$8 billion on upgrading or building factories for 45-nanometer chips.

That figure includes the new factory, up to US$3.5 billion for a new factory in Kiryat Gat, Israel, and US$1.5 billion to retool an existing facility in New Mexico, both of which are scheduled to open next year.

AMD is retooling one of its factories in Dresden, Germany, to handle the new technology. The company has not given a cost for its transition.

The battle over manufacturing technology amplifies the competition between the world's No. 1 and No. 2 makers of microprocessors.

"Customers buy much more than nanometers," AMD spokesman Gary Silcott said. "We may be behind certain companies by a few months in terms of introducing 45-nanometer, but we're way ahead in a number of critical design features. We think we're in a very competitive position."

Intel's lead applies more pressure to AMD as it struggles to emerge from a deep financial funk. AMD has lost US$1.61 billion through the first nine months of the year on sales of US$4.24 billion.

Meanwhile, Intel is thriving, racking up US$4.77 billion in profits on US$27.6 billion in sales over the same period.

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