Intel waves Old Glory with wafer baker plans
Ponying up $8bn for 'unimagined innovation'
Chip giant Intel will shell out some $8bn and create thousands of jobs to build out chip development and fabrication facilities in the US for its future 22 nanometer PC and server chips.
The company said it will upgrade four exiting US wafer-bakers with 22nm equipment, specifically the D1C and D1D fabs in Oregon and the Fab 12 and Fab 32 factories in Arizona. Some of that $8bn will also go into the creation of a new fab, called D1X, that will be plunked down in Oregon and start pumping out test chips in 2013.
"Intel makes approximately 10 billion transistors per second. Our factories produce the most advanced computer technology in the world and these investments will create capacity for innovation we haven’t yet imagined," said Brian Krzanich, senior vice president and general manager of Intel's manufacturing and supply chain, in a statement. "Intel and the world of technology lie at the heart of this future," he continued. "Contrary to conventional wisdom, we can retain a vibrant manufacturing economy here in the United States by focusing on the industries of the future."
Intel was quick to point out that while it generates approximately three-fourths of its revenues outside of the United States, about three-quarters of its chip production capacity is located in its home country.
This, of course, is all made possible by the fact that in any given PC or server sale, it's Intel and the PC or server software provider who get damned near all of the profits, leaving very little left over for the actual PC or server maker. (Funny how Intel didn't mention this.) Hence, most PCs and an increasingly large number of servers are made in the Asia/Pacific region.
What's more, you can bet your last dollar or euro that if Intel could get the right kind of intellectual-property assurances from the Chinese government, and if the US Congress wouldn't go completely nuts, it would build more fabs in China and fold up Old Glory in perfect triangles and stuff it into a closet somewhere.
Intel says the investments in upgrades will allow it to keep its current manufacturing employee base in its wafer bakers in Arizona and Oregon, and says further that it will add somewhere between 800 and 1,000 permanent high-tech jobs once the 22nm upgrades are done. This upgrade and new construction will also create somewhere between 6,000 and 8,000 construction jobs at a time when the construction industry is flat on its back thanks to the Great Recession.
Just as the Obama Administration was coming into office and the US Congress was trying to craft a stimulus package back in February 2009, Intel announced it would spend $7bn over the next two years (meaning that money is just about to run out) to upgrade facilities in Oregon, Arizona, and New Mexico, where Intel had 7,000 workers at the time (a sizeable chunk of the 45,000 workforce Intel had at the time). The upgrades were to push out 32nm chips — which clearly have been a boon for Intel, seeing as how the company has posted several record quarters in 2010, driven by a recovery in PC and server spending after a serious downdraft in 2008.
Back then, the flag-waving and jobs-creating lecture came right on the heels of Intel closing down five plants worldwide. That move gave pink slips to somewhere between 5,000 and 6,000 workers, including those working in wafer-fabrication facilities in Oregon and California as well as chip assembly plants in Malaysia and the Philippines. A few weeks earlier, Intel had closed its Shanghai chip packaging plant, which employed 2,000 people, and moved those jobs elsewhere in mainland China.
According to EE Times, there had been speculation that the new D1X fab in Hillsboro, Oregon, would be a production fab for 300mm or maybe even 450mm wafers, but it turns out that it is going to be for research, not production.
Intel said in its statement that the first chips to come out of the fabs using the 22nm processors will be its "Ivy Bridge" chips, which are slated for production in late 2011. The Ivy Bridge chips are kickers to the "Sandy Bridge" PC and server chips, which we told you all about here. The rumors are for the Ivy Bridge shrink of the Sandy Bridge parts to include more cores than the two or four expected with PC parts and the two to eight expected with server parts in the Sandy Bridge family. ®
$8bn for ~1000 jobs?
Can't help but think just giving the money away would make everyone right rich and happy. But then we wouldn't get a 22nm plant to basically do exactly the same thing intel did in 45nm and 90nm and 180nm and.... Their innovation isn't so much in chip design these days.
Intel and Oregon is an on-going success
"What's more, you can bet your last dollar or euro that if Intel could get the right kind of intellectual-property assurances from the Chinese government, and if the US Congress wouldn't go completely nuts, it would build more fabs in China and fold up Old Glory in perfect triangles and stuff it into a closet somewhere."
Having worked at Intel and having a pretty good knowledge of Intel, the above statement is wrong. Intel is very well aware that if it takes the short term profit approach that Wall Street demands by doing bleeding edge work in China, etc it will lose it's intellectual strength and ability to compete. Investing in local manufacturing, in a locality already proven highly successful/profitable for Intel, makes perfect sense for a company driven by cutting end technology. Remember Intel's products are not only cutting edge but equally important is their manufacturing capability for their products. See Andy Grove's take: http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html
A change in the wind
To get the full flavour of this, you had to be in Ireland around the time of the Lisbon Treaty referendum. Intel put ads on the side of the Dublin buses telling us to vote Yes this time if we knew what was good for us. Well, we voted Yes, but sad to say we're still waiting for any sign that Intel intends to upgrade its dusty 65nm fab in Leixlip.
It looks as if Intel sees a new surge of industrial protectionism brewing in the US, and wants to position itself on the right side of it. Being (as you said) a high-margin monopoly producer, it can well afford to swallow high US manufacturing costs as long as its monopoly remains politically favoured and protected.