Intel's US$3b factory expansion opens in key comeback step

[SAN FRANCISCO] Intel announced the opening of a US$3 billion extension to its D1X plant in Oregon, an investment aimed at speeding up technology development needed to regain leadership of the chip industry.

The biggest maker of computer processors reiterated its plan to have better production technology than rivals by 2025 and have its factories reach parity a year earlier than that.

The 270,000-square-foot extension, an increase of 20 per cent to the D1X facility, demonstrates the chipmaker's willingness to spend upfront to accelerate the use of more advanced production techniques, according to Sanjay Natarajan, an Intel senior vice-president. D1X, effectively a giant lab, is now more capable of developing multiple methods of manufacturing in parallel and transferring them to its mass production counterparts within Intel's network, he said.

Chief executive officer Pat Gelsinger is trying to make up for time lost by his predecessors. How a chip is made determines its capabilities - how much data it can hold, how quickly it can process that data and how much energy it uses while doing so. Intel was once the unquestioned leader in that field, allowing it to manufacture products that dominated computing and commanded high prices.

Progress in chip manufacturing is measured in nodes. Intel's 10-nanometer node was years late and didn't deliver the promised benefits. That allowed companies such as Taiwan Semiconductor Manufacturing (TSMC) and Samsung Electronics to offer outsourced production that's better than the output of Intel's factories. TSMC and Samsung customers such as Nvidia and Advanced Micro Devices have fielded more competitive products and taken share, squeezing Intel's profitability and holding back growth.

D1X is spearheading Gelsinger's plan to reverse that trend. Going from one production node to a more advanced technique typically takes 18 months to 2 years. Intel is aiming to progress through 5 nodes in 4 years to catch and pass its Asian competitors.

Natarajan and Ryan Russell, the co-general managers of Intel's logic development efforts, were keen to stress that the company has learned from recent problems. While it's taking risks with new experimental technology, the company is also making sure that things are done in a modular way - so that troublesome portions can be shelved or removed - and that it has backup plans.

D1X is in Hillsboro, Oregon, west of Portland. The Ronler Acres site, which employs about 14,000 people, is being renamed Gordon Moore Park to honour the company's co-founder. BLOOMBERG