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45nm production and 32nm ramp not affected

Intel intends to close three of their Assembly & Test facilities, located in Cavite and Penang. They will also halt production at two other Fabs, laying off at least 5,000 people.

The Cavite site in the Philippines is actually two buildings next to each other, known as CV1 and CV2. CV1 had the capability to handle wafer sizes in 200 and 300mm in its 268,000 square foot clean room, while CV2 could only handle 200mm in its smaller 149,000 sq. ft. clean room. CV1 was built in 1997, while CV2 was built in 1998 and handled mostly flash memory processing, which has been made redundant due to Intel exiting that business line.

The Penang site in Malaysia consists of three buildings. PG6 and PG7 could only handle 200mm wafers, but PG8 was upgraded in 2005 to handle 300mm wafers. Malaysian operations will continue and consolidate at their Kulim facilities.

After Intel's wafers are produced at a Fab, they are sent to Intel's Assembly and Test facilities where each wafer is cut into individual silicon dies, placed within external packages, and tested for functionality.

Intel is consolidating a lot of its Asian Assembly and Testing into its newest facilities in Chengdu, China, and Ho Chi Minh City, Vietnam, due to labor costs and lower demand.

Production will halt at Fab 20 in Hillsboro, Oregon. It was built in 1996 to handle 0.13 micron core logic production on a 200mm line, boasting a 140,000 sq. ft. clean room.

Intel will also halt wafer production operations at its D2 Fab in Santa Clara, California. Built in 1988, it handled mostly flash and communications chips, as well as cellular and handheld product development. Throughout its twenty year life, D2 saw 0.13 micron and 90nm production, and was upgraded in 2006 to run 65nm on its 200mm line. Intel's headquarters are also located in the City of Santa Clara.

Intel announced that it would be taking a $250 million charge due to Fab underutilization on January 15th.

Intel was particularly persistent in pointing out that this is all obsolete production, and does not affect current production at its three Fabs producing at 45nm in Chandler, Arizona; Kiryat Gat, Israel; or in Rio Rancho, New Mexico. It will also not affect the introduction and ramping of their 32nm process.

Updated 1/23/2009:

Only CV2 will close in Cavite, due both to Intel discontinuing flash production and its obsolete 200mm line. CV1 will continue to operate T&A of 300mm wafers.

PG6 (96,000 sq.ft.) and PG7 (115,000 sq.ft.) will close as they are too small to be upgradable, plus they are only capable of handling 200mm. PG8 will however continue to operate. The personnel at PG6 and PG7 have been offered relocation to Kulim.



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business as usual,
By dastruch on 1/21/2009 6:48:05 PM , Rating: 2
nowadays...




RE: business as usual,
By teckytech9 on 1/21/2009 7:37:46 PM , Rating: 2
Price cuts, thinner margins, competition from AMD, lower consumer demand, oversupply, large inventories, credit crisis, and an analyst somewhere eager to call the shots.
Thus, the company responds to recommendations to prevent a possible stock downgrade and lower price targets.


RE: business as usual,
By Regs on 1/21/2009 8:11:48 PM , Rating: 1
Instead of converting them, they decided to cut costs and write them off as "excess". From what I see demand is still high, actually there was a growth in sales for CPUs this last quarter. Though the majority of those sales came from value parts maybe from back inventory.


RE: business as usual,
By teldar on 1/21/2009 8:47:31 PM , Rating: 4
The only problem with that is that the newer processors are being made at 45nm and on 300mm wafers. The number of processors able to be produced in one fab absolutely dwarfs the number that was made at even 65nm on a 200mm wafer.

I'm sure that of the fabs Intel has, it was imperative to close something down because they wouldn't need all the capacity available. Maybe they'll be able to sell the equipment to other manufacturers in the world who would be interested in some old Intel tech.

T


RE: business as usual,
By StevoLincolnite on 1/21/2009 9:09:35 PM , Rating: 3
The older fabs are useful for various reasons, for Instance Intel might have a 45nm Fab for it's processors.
Then a 65nm Fab for Chipsets, then a 90nm for DDR2 Ram, 130nm for basic stuff.
That way companies can utilize there fabs for many years without having to retool them, Obviously these fabs existed in the Dinosaur age of the 1990's have since been made redundant for now, however after the Credit Crysis is over and things pick up they might gain a breath of new life.


RE: business as usual,
By Oregonian2 on 1/21/2009 10:07:22 PM , Rating: 2
Yes, it used to be that some of their lower end embedded processors were pushed as being particularly cost-effective because they were made in old plants where the costs had already been amortized -- allowing them to sell things at particularly low cost. It may be that the availability of products in their portfolio that can 'stand' being made in old processes isn't sufficient to keep those lines running (or even their minor products require state-of-the-art processes to compete now). Especially that they've now spun off or closed down many of their previously diverse product lines.


RE: business as usual,
By flipsu5 on 1/21/2009 10:38:41 PM , Rating: 2
The surprise is establishing the 45 nm process did not help Intel's margins for the latest quarter(s). It indicates an unavoidable, unscaled cost that wasn't negligible this time.


RE: business as usual,
By oregonchipmaker on 1/21/2009 9:56:29 PM , Rating: 2
In many cases, conversion from 200 to 300 mm wafers is not possible without MAJOR construction...as in tear down and rebuild. This is both not necessary with the 45nm and now the 32 nm 300mm wafers, and not a good expenditure in today's economic climate. Also, Intel is moving to more SOC tech, and the same processes that make the processors also makes the chipsets. More cost effecient.

However, they will still own the stripped facilities, so that they can, when the economy improves, reconfigure those facilities to something else.


RE: business as usual,
By Oregonian2 on 1/21/2009 10:14:50 PM , Rating: 2
Local reports have FAB20 in Hillsboro (immediately adjacent to where I am and live) not really being "shut down" but being put into a "safe mode" or something like that which is more of a "hibernation" mode such that the facility may still be used for something at some point.

Also note that this will affect about 1,000 employees in Hillsboro (out of about 15,000).


RE: business as usual,
By Jansen (blog) on 1/22/2009 7:07:38 AM , Rating: 2
The T&A sites are being shut down; Fab 20 and D2 are halting production. The information that I have indicates they could be restarted at a later time.


RE: business as usual,
By teckytech9 on 1/21/2009 11:44:53 PM , Rating: 2
Last quarter results are known, however in this quarter, the company has not released an official forecast. That's the first time anyone remembers not having one. Maybe Andy Grove knows when?

Worst case is that demand has fallen off the cliff resulting in drastic cost cutting measures. This means that production is being scaled back in ALL of their fabs.


RE: business as usual,
By paydirt on 1/22/2009 9:44:39 AM , Rating: 2
Depends on what the definition of "cliff" is.

Yes, the decline has been significant. No, the economy has not suddenly stopped completely; people are still doing business.

Here's the deal. In a recession, all businesses work down existing inventories and greatly reduce orders. The working down of inventories greatly reduces revenues and "looks scary"; however, when businesses stop working down inventories and must then place new orders then it will look like the economy is suddenly exploding.

I work in a very small business (5 employees) and we just ordered a $6,000 server class server three days ago. (We needed to buy another server to avoid downtime with a changeover to Small Business Server 2008. Now with SBS 2008 Premium, we can split Exchange and SQL onto separate machines)


RE: business as usual,
By phxfreddy on 1/22/2009 8:36:41 AM , Rating: 2
As a person you have up days and you have down days. Its unreasonable to think otherwise. It is unhealthy to tweak to avoid the down days.

So is it reasonable to think the economy should always be go-go? Is it healthy to think we can Obama-spend our way out with tweaker inspired 1 trillion dollar deficits?


RE: business as usual,
By soloman02 on 1/21/2009 8:01:15 PM , Rating: 2
Business as usual? Hardly. These fabs were not making Intel money so they did the business smart move of shutting them down. This is good for Intel because now they can divert the money they were spending on those fabs elsewhere, like R&D or as cash to burn through to ride out this economic perfect storm.


RE: business as usual,
By Chadder007 on 1/21/2009 8:25:25 PM , Rating: 3
More Chinese Processors....who would have thought.
They are going to be the only ones left with jobs to buy the damn things.


RE: business as usual,
By mattclary on 1/22/2009 9:10:45 AM , Rating: 2
quote:
Intel was particularly persistent in pointing out that this is all obsolete production, and does not affect current production at its three Fabs producing at 45nm in Chandler, Arizona ; Kiryat Gat, Israel; or in Rio Rancho, New Mexico .


What about the X25-M SSD?
By darkfoon on 1/21/2009 10:08:39 PM , Rating: 2
quote:
CV2 was built in 1998 and handled mostly flash memory processing, which has been made redundant due to Intel exiting that business line.


Why are they exiting the making of flash memory when they just released a few months ago two SSDs which both use flash memory?
Do they buy the flash chips from another manufacturer and the only Intel part is the controller and fancy firmware?

I am a little confused by that statement.




RE: What about the X25-M SSD?
By Eskimo on 1/21/2009 11:13:38 PM , Rating: 2
Intel's NOR Flash business for which the packaging facility in question supported was divested into a joint venture with ST Micro. That JV operates as an independent company called Numonyx.

Intel has also invested money and IP into another JV with Micron called IM Flash which manufactures NAND flash which can be used in SSD devices. Intel is entitled to receive a portion of that NAND flash as set forth by the JV agreement. I believe that the assembly and packaging facilities for IM Flash are former Micron brought into the JV as part of Micron's contribution.


So?
By DASQ on 1/21/2009 8:55:01 PM , Rating: 3
Intel gets rid of fabs regularly... oh no, they lost a 130nm fab! Too bad even their chipsets are =<90nm.

They don't upgrade fabs like other foundry companies do. Intel builds a fab to build CPU's in the newest shiny process (say 45nm). When CPU's move onto 32nm or what have you, the 45nm fab gets converted into a chipset fab... and past that, they sell them off. (I got quoted about $10bn for a 90nm fab from an Intel engineer I chatted with last year :P)




I can't help feeling...
By Clauzii on 1/21/2009 8:03:02 PM , Rating: 2
... that this more and more looks like a new Y2K bubble, having so many, and big, computer companies lowering their gears drastically.




Streamlining
By parge on 1/21/2009 8:37:48 PM , Rating: 2
Whilst I feel sorry for those that have lost their jobs, this is ultimately a good thing. This will promote more focus on their newer 45 and 32nm fabs which is where the future lies, and is a good chance to streamline to company towards that goal.




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