Intel Corp. this week announced plans to invest $650 million in the company’s existing manufacturing site in the USA. The investment will be used to increase the capacity of the 300mm wafer fabrication facilities in Rio Rancho, New Mexico, called Fab 11X, and showcases that Intel continues to expand its manufacturing capacities at a rapid pace.

“Today’s announcement signals another important addition to one of Intel’s pre-eminent U.S. manufacturing sites, and better positions us to meet customer requirements,” said Intel president and chief executive Paul Otellini.

Construction and new tool installations are scheduled to continue through 2006, with production operations set to begin through the new expansion in early 2007. This investment in New Mexico will result in the creation of more than 300 new manufacturing jobs, the company indicated.

This investment is part of Intel’s strategic goal to increase manufacturing on 300mm wafers that use 90nm, 65nm and future process technologies. Intel has several fabs manufacturing with 300mm wafers today. These facilities are Fab 11X in New Mexico, D1D and D1C in Oregon and Fab 24 in Ireland. Additional manufacturing capacities mean that the company is on-track to produce more microprocessors, chipsets or other silicon-based devices, which potentially may increase competitive pressure on smaller chipmakers, such as Advanced Micro Devices. Furthermore, producing chips using more advanced equipment means that the company builds its product in a more cost-effective manner.

“Additional 300mm wafer manufacturing capability helps improve the overall cost-effectiveness of our worldwide manufacturing network. Investing in an existing manufacturing site allows us to take advantage of our highly skilled workforce in New Mexico,” Mr. Otellini said.

Manufacturing with 300mm wafers increases the ability to produce semiconductors at a lower cost compared with more widely used 200mm (wafers. The total silicon surface area of a 300mm wafer is 225% higher compared to 200mm wafer, and the number of printed die (individual computer chips) is increased to 240%. The bigger wafers lower the production cost per chip while diminishing overall use of resources, as manufacturing with 300mm wafers uses 40% less energy and water per chip.