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Intel’s RR plant still viable

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Years of useful life remain, even without upgrades

Copyright © 2013 Albuquerque Journal

It’s a question that surfaces in conversations at coffee shops and board rooms in the Albuquerque metropolitan area: Will Intel Corp. invest in upgrades at its plant in Rio Rancho to produce next-generation technology or, as the chips it now produces here become older and less useful, will the Rio Rancho factory wither up and go away?

But the man now running the show in Rio Rancho, site manager Kirby Jefferson, says that kind of talk is premature, because even without upgrades for newer technology, the plant will have plenty of work for years to come.

Intel has invested an average of about $1 billion per year since 1995 in upgrades at Rio Rancho. That includes a $2.5 billion investment in 2009 to allow the factory to transition from making 45-nanometer transistors for chips to 32 nanometers – state-of-the-art technology at that time.

Such investments have made the New Mexico plant the “largest, single, continuous fab” in Intel, which operates 16 factories and assembly test facilities worldwide, said Jefferson, who became Rio Rancho site manager in May.

New Mexico wasn’t selected for recent upgrades to 22-nanometer chips, nor the latest 14-nanometer technology. And it’s unclear whether it will be included in future investments in next-generation 10-nanometer and later seven-nanometer technology.

But Rio Rancho’s 32-nanometer chips still have a lot of market life, Jefferson said. That’s because they’re still used in much of today’s computing technology, and they provide support for some of Intel’s newer, more powerful processors.

The 32-nanometer chips sets, for example, work in conjunction with Intel’s newest 22-nanometer Haswell chip, a power-saving processor that supports touch-screen computing on ultrabook computers, which are hybrids of notebooks and tablets.

Haswell support chips made here

The Haswell chip, which was released this year, is part of Intel’s strategy to carve out a bigger niche in the competitive mobile computing market. The Haswell is made at other Intel factories that produce 22-nanometer chips.

But Rio Rancho remains a key player because, as that new technology goes to market, its 32-nanometer chips are providing computing support.

“For every chip that sells, you must have a chip set, and we manufacture the chip set that goes with the Haswell chip,” Jefferson said.

“Smart phones and tablets are also a very important area that Intel is moving into and, today, all of our phone and tablet chips come from 32 nanometer. So we’re very central to Intel’s strategic direction going forward.”

Intel’s technology for mobile devices will transition to smaller nanometer chips in the next two to three years, as the company strives to increase processing power to enable devices to do more things while providing longer battery life on a single charge.

But even with that transition, Intel still has 32-nanometer technology imbedded in things like traffic lights and machines, which have very long life cycles.

“We could have another 10 years in some of those businesses,” Jefferson said.

In addition, as Intel struggles to maintain its market dominance in a world that’s moving from desktops and laptops to mobile computers, the company is opening its factory doors to do custom chip-making for business partners in targeted industries, such as smart automotive technology, and even for competitors who make mobile devices.

‘Foundry’ bodes well

That new strategy, called Intel’s “foundry” business, bodes well for the future of Intel’s Rio Rancho site.

“Intel has made astronomical investments in these facilities, and the longer we can leverage those investments, the greater the payback is to shareholders,” Jefferson said. “We probably have 10 years worth of business lined up, so there’s no risk of us becoming idle.”

Ken Dulaney, who closely follows Intel as a vice president with the technology research firm Gartner Inc., said Intel’s historical investment in New Mexico is a good indicator that, even if next-generation technology isn’t forthcoming in Rio Rancho, the state will keep what it has.

“The fact that (Intel) has been that committed to New Mexico over the years would give me confidence,” he said.

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