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)

Now, under a process Intel executives call "Copy Exactly," the seeds are back in Chandler, where their job is to duplicate even the subtlest manufacturing variables found in Portland, from the color of a worker's gloves to the type of fluorescent lights used.

One of those seeds is Erica Anderson, a five-year Intel employee who's responsible for the performance and upkeep of two machines that wash silicon platters _ also known as wafers _ in a chemical bath to remove impurities. In January 2004, she left Chandler for a 16-month stint at a development facility in Oregon, so she'd know her part of the new process cold by the time Fab 12 reopened in October.

"There's peace of mind in knowing that your equipment is set up exactly and that the process worked up in Portland," says Anderson, 27. "You feel pretty confident that your process is going to work down here."

All the hard work is paying off. The "yield," or percentage of chips on a 12-inch wafer that function properly, rose more quickly during Fab 12's transition than the rollout of any new process in Intel's 38-year history, Franz said.

There's little margin for error. Over the past few years, Intel's edge in manufacturing has been blunted. A series of new chip designs over the past few years has allowed AMD's market share to rise more than 3 percentage points, to 18.2 percent, versus the 80.2 percent held by Intel, according to Mercury Research.

The most notable new feature was the ability for the smaller competitor's chips to handle larger blocks of memory needed by many corporations and scientific customers while remaining compatible with software designed for earlier systems.

While no one disputes the important advantage Intel gets from outspending its competitors on factory gear, AMD's gains are an important reminder that manufacturing prowess alone is no guarantee of success.

"It doesn't matter if you have a lot of manufacturing capacity if nobody wants to buy what you're selling," says Dan Niles, an investment manager with Neuberger Berman Technology Management.

Intel is countering AMD with a host of new processors based on a new chip design due in the second half of the year. One of them, for desktop PCs, will deliver 40 percent better performance while reducing power consumption by the same margin.

The company is also hard at work on an even more compact 45-nanometer recipe slated to be rolled out in 2007 that will ensure Intel maintains its manufacturing lead.

Intel Chairman Craig Barrett, whose "Copy Exactly" technique is credited by industry watchers as a key reason for the company's unmatched manufacturing muscle, says the challenge to get things right grows with each new transition.

"It's a little bit like the baseball player with a batting machine dialing up the speed of the pitches," he says. "Each generation we dial up the speed by 10 mph, but in spite of that, we're able to hit the ball more often."

___

On the Net:

http://www.intel.com