Intel is to spend $650m upgrading its Rio Rancho, New Mexico 300mm-wafer plant the chip giant has announced.

The expansion of Fab 11X will create more than 300 new jobs at the facility, the company added.

The cash will be used to increase the fab's capacity, allowing Intel to punch out even more 90nm and, soon, 65nm processors than before. It's all about increasing chip volumes which, in turn, allows Intel to reduce prices.

Intel said the work will see the construction of new clean rooms taking place next year with a view to beginning production early in 2007.

That may not impress some local residents who have in the past criticised the plant's environmental record. Intel maintains it does what it can to minimise the environmental impact of the plant, but chip-making is inherently a dirty business, and the facility has been known to pump out more toxic materials than it should.

In a bid to calm environmental fears, Tim Hendry, Intel Technology and Manufacturing VP and Fab 11X factory manager, said: "Manufacturing with 300mm wafers uses 40 per cent less energy and water per chip." That said, if you produce more wafers, you'll use more water and energy, so the benefits may prove fleeting.

In July, Intel said it will build a new 300mm-wafer fab in Arizona at a cost of $3bn. It is also planning to spend $345m expanding two US 200mm-wafer fabs. ®