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Thu, Feb 12, 2009 - Page 10 News List

Intel investing US$7bn in US factory upgrades

AP , SAN FRANCISCO

An undated handout photo shows Intel Fab employees wearing Gore-Tex semi-custom-fitted bunnysuits that must be worn in the Fab cleanroom.

PHOTO: EPA/INTEL

Intel Corp plans to spend US$7 billion upgrading its US factories over the next two years, a sign that the recession hasn’t extinguished chipmakers’ lust for cutting-edge equipment.

The company’s investment, announced on Tuesday by Intel CEO Paul Otellini at a speech in Washington, speaks to the semiconductor industry’s need to keep investing heavily, regardless of the poor economic climate that has led Intel to cut jobs.

The investment could be a boon to firms that produce chip-making equipment, like Applied Materials Inc and KLA-Tencor Corp, and is another example of how Intel’s deep pockets have kept rival Advanced Micro Devices Inc (AMD) at bay.

AMD, having lost nearly US$7 billion over the past two years, wants to break off its factories into a separate company to unload debt and save money. A shareholder vote was scheduled for Tuesday, but was postponed until next week because only 42 percent of investors had voted. AMD needed at least half to go forward.

Intel is struggling with the worst PC market in years. Overall semiconductor sales fell last year for the first time in seven years, slipping about 3 percent to US$249 billion, the Semiconductor Industry Association said.

Yet Intel says its latest investment is the most it has ever spent on a transition to new manufacturing technology.

It said the US$7 billion would pay for new machinery at factories in Oregon, Arizona and New Mexico, which will be outfitted to produce chips based on 32-nanometer technology.

But Intel’s investment doesn’t necessarily mean lots of new jobs will be created. he money will pay the salaries of about 7,000 “high-wage, high-skill” jobs that already exist at those plants.

The investment comes as Intel is cutting up to 6,000 manufacturing jobs by closing plants in Malaysia and the Philippines and stopping production at facilities in Oregon and California.

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