Intel 45nm backed by fab four

Intel has had an up and down week of sorts when it comes to processor fabrication plants. The company’s ill-fated Austin, Texas, fab was demolished on Sunday morning. But on Monday afternoon it announced plans to refit its Fab11X in Rio Rancho, N.M. Fab 11X will become Intel’s fourth 45-nanometer manufacturing plant following the renovations. Intel plans to spend $1 billion to refit the plant with 45nm manufacturing equipment. The plant currently turns out 90nm processors using 300MM wafers.

Intel plans to start 45nm production at its Fab D1D in Hillsboro, Ore., sometime later this year. The company has said that its 45nm processor family, Penryn, is in good shape and I continue to expect that it will begin shipping Penryn family chips late this year for inclusion in computers early next year. Intel’s Kirk Skaugen, general manager of its Server Platforms Group, confirmed this is the plan last week when he told analysts that 45nm Xeon chips would begin production in late 2007 versus the first quarter of 2008.

All told, Intel will spend $7.5 billion on three of its four 45nm plants, including $3 billion on its new Fab 32 in Chandler, Ariz., and $3.5 billion Fab 28 a new plant being built in Kiryat Gat, Israel. Fab 32 will be first to follow D1D by starting production late this year, Intel has said, followed by Fab 28 in the first half of 2008. The renovated Fab 11X is scheduled to being 45nm production in the second half of 2008. The Austin fab, meanwhile, was left as skeletal shell after Intel pulled back on its capacity expansion plans during the computer market downturn of 2001. The shell made way for a new courthouse building. Intel generally keeps a new fab running through several generations of process technology and several resulting processor families—this is exactly what it’s doing with Fab 11X, which opened in 2002—before shifting it to manufacturer chipsets for PCs or servers.

Intel appears to have lost about $124 million, according to one report, by not pursuing the Austin fab project. That’s relative pocket change when it comes to completing a fab as most of the cost  in equipment. These days, it costs about $600 million to $700 million erect a fab building. Outfitting it with chipmaking equipment adds another $2 billion to $3 billion to the price tag. No one ever said making chips was cheap.