No word on made-in-Asia 32nm Intel chips

update Chip giant announces US$7 billion investment in U.S. fabs for 32-nanometer, but it is not clear if there will be similar investments in the region.
Written by Vivian Yeo, Contributor

update Intel has pledged to suit up its manufacturing facilities in the United States to support 32-nanometer processing, but it is not clear if the chipmaker has plans to invest in similar capabilities in Asia.

In a telephone briefing with regional media Wednesday, Stephen Smith, Intel's vice president and director of digital enterprise group operations, reiterated the company's roadmap, including its plans to roll out the first processors based on 32-nm technology by the fourth quarter of 2009.

The chip manufacturer demonstrated its first working 32nm silicon on Tuesday in the United States. Intel CEO Paul Otellini also announced Tuesday that the company would invest US$7 billion into four existing plants in the United States and equip them with capabilities to manufacture silicon wafers based on 32nm-processing technology.

Smith told ZDNet Asia that Intel made a number of investments in the Asia-Pacific region over the last two years, including large assembly and test facilities in Vietnam and China, and the company's first wafer fab in Asia, located in Dalian, China.

"Most of our effort in terms of growth [and] R&D (research and development) headcount is focused on some of these emerging markets and we'll continue to see that over the next few years," he noted. The executive, however, did not indicate specifically if the Dalian site would be involved in the production of 32nm processors.

Some investment cuts
But, Intel has made some cutbacks amid its investments in the region. Last month, it announced plans to close the company's assembly and test facilities in Malaysia and the Philippines, a move that is expected to impact 3,000 staff.

Earlier this month, Intel also announced it would shut an assembly and test plant in Shanghai over the next 12 months. China Daily reported that the chipmaker is arranging for the 2,000 affected workers to be re-deployed to Chengdu, Dalian or to its other operations in the country.

Shane Rau, research director for computing, networking and storage semiconductors at IDC, said in an e-mail interview Thursday, Intel's 32nm technology push is "both a competitive and market weapon".

Rau explained: "Competitively, Intel will be the first processor vendor to reach 32nm, which will give it cost options and product integration options that, say, AMD, won't have since it's still transitioning to 45nm. At the market level, the same cost and product integration options give Intel more ability to try to stimulate market demand."

Intel and AMD engaged in a price war during the last downturn in 2001, but failed to stimulate market demand then, he added. "This time, Intel appears to be using 32nm as a different attempt."

In IDC's fourth quarter and full-year 2008 report for the PC processor market released Wednesday, Intel made slight gains in market share during the final quarter of 2008, bringing its full-year market share to 80.3 percent. AMD's share of the processor market in 2008 dipped by 3.1 percent to 19.2 percent.

According to IDC, worldwide PC processor unit shipments declined 17.0 percent quarter-on-quarter and 11.4 percent year-on-year. In terms of revenue, this market saw a drop of 18 percent over the third quarter, and 22.2 percent over 2007. Total PC processor unit shipments for full-year 2008 grew 10 percent, while revenues grew 0.9 percent to US$30.8 billion.

The market analyst also predicted that processor shipments will continue to decline sequentially in the first two quarters of this year, despite efforts made in the supply chain to avoid excess inventories.

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