Intel Relentlessly Pursues Cutting Edge

A clean room is worked on at a new Intel fabrication plant in Chandler, Ariz. on Wedneday, May 3, 2006. Those looking for the secret to Intel's profitability, among the highest in the high-tech or manufacturing industries, need look no further than this bedroom community on the outskirts of Phoenix. (AP Photo/Khampha Bouaphanh) (Khampha Bouaphanh - AP)

CHANDLER, Ariz. -- The glass-encased room inside Intel Corp.'s microchip factory here, with its shiny, metallic surfaces and frigid air, is a world away from the blistering sun and brown earth outside. An army of robots suspended from the vast ceiling glide from one refrigerator-sized machine to the next. Their cargo: thousands of 12-inch silicon platters that form the raw material for Intel's most sophisticated computer microprocessor to date.

Inside this chip fabrication plant on the outskirts of Phoenix, engineers clad in what look like space suits are six months into a dramatic overhaul that could determine Intel's future as it faces its stiffest competition in more than a decade.

Intel closed the factory, officially known as Fab 12, for 18 months and spent $2 billion to retool it with more than 800 machines that follow a new manufacturing recipe cooked up more than four years ago and is already in place at a plant in Oregon. By year's end, the process will be up and running in a total of four fabs.

"Nobody ramps a technology at the rate we do," says Intel Vice President Tom Franz. "I'd be willing to stand up and say that in front of anybody, including our competitors."

The overhaul is part of Intel's and the rest of the semiconductor industry's relentless quest to shrink the size of its circuitry so more transistors fit onto the same size chips. For decades, the industry has doubled the number of transistors on a chip every two years or so, a pace that has become known as Moore's Law, after Intel co-founder Gordon Moore predicted it in a 1965 article.

Because it allows a new generation of smaller, faster products at roughly the same cost as earlier ones, Moore's Law has provided a growth engine that separates the electronics industries from virtually every other business.

But no other company spends as much money as Intel adhering to the law's rigorous demands, and as a result the payoff from more efficient factories is higher. Intel, which has spent $25.3 billion on new equipment over the past five years and is the world's largest chip maker, also gets important competitive advantages from its uncontested role as manufacturing champion.

"If you're the person that's setting the pace and setting the course, everybody else is chasing you and it's a lot easier to stay in the lead," says analyst Rob Enderle of the Enderle Group.

Thanks to Moore's Law, Intel's Core Duo microprocessor, being manufactured in Chandler, is small enough to fit on the nail of an adult pinky finger. If it was made using the process considered state-of-the-art in the early 1990s, its 151 million transistors would take up as much space as compact disc jewel case.

Under the recipe being rolled out in Chandler, a chip's average circuitry measures 65 nanometers, small enough that 100 transistors would fit into a single human blood cell.

Within the next few months, the majority of Intel's processors will be made using the new process. That puts the Santa Clara, Calif.-based company about 18 months ahead of its chief competitor, Advanced Micro Devices Inc., and up to five years ahead of other chip makers, says VLSI Research analyst Dan Hutcheson.

Although some of the gear arrived just weeks ago and is nothing like the tools used in the past, the equipment is already intimately familiar to the thousands of engineers who work at Fab 12. That's because about 400 "seed" employees have already spent more than a year working in what amounts to a carbon copy of the plant in Oregon.