Intel seizes opportunity to continue expansion plans
05/01/2001
Meg Villeneuve
SANTA CLARA, CA—Even though chip giant Intel Corp. (Santa Clara, CA) has put some expansion plans on hold, company officials say they are moving ahead with its $1 billion upgrade to Fab 17, located in Hudson, MA.
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Barrett: Making the most of the semiconductor downturn.
"Two things are moving forward at Fab 17," says Intel spokesperson Patrick Ward. "The first is the building up of 100,000 square feet of cleanroom space and the second is our move from 0.18-micron process technologies to 0.13-micron." The company expects the transition to 0.13-micron to take place during the fourth quarter of 2001.
Intel projects currently on hold include the building of Mod 4 at Fab 17 and the opening of Fab 24 in Lexlip, Ireland. A few months ago Fab 24 caused some commotion within the semiconductor industry when Intel announced that it was going to make the fab a 300 mm facility instead of the planned 200 mm facility. At the time, industry experts were surprised at Intel's bold move, but officials said that in the long run the fab will be able to reduce costs, while increasing its chip-making abilities.
Fab 24 was expected to be online in the second half of 2002 but that date has now been pushed back 12 months to the third quarter of 2003.
Nine months ago Intel—like many other chipmakers—was scrambling to increase production and add to its workforce. That's no longer the case. In its most recent earnings guidance, Intel says it will decrease its headcount (through attrition) by some 5,000 people by the end of the year. The company plans to hire people for "critical needs" jobs only. According to officials, Intel has not changed its capital-spending forecast, which remains at $7.5 billion for 2001.
In an interview given to British TV Channel 4, Intel CEO Craig Barrett said, "We don't know how long this slowdown is going to last. It may last six months, 12 months or 18 months." Barrett went on to say the next quarter does not look too bright and hoped the industry was nearing the bottom of the downturn.
To date, Intel competitor Advanced Micro Devices (Sunnyvale, CA) has not announced any layoffs or changes in spending.
"We are looking to the future even though the market is in a lull," said a spokesperson for National Semiconductor (Santa Clara, CA). Like Intel, National will focus on R&D during the downturn.
Meanwhile, it was reported in The Columbian newspaper that Taiwan Semiconductor Manufacturing Corporation (TSMC) has revised its capital spending plans to $2.2 billion for 2001, a decrease of $1.5 billion from the fab's initial spending projections. However, on a brighter note, company officials say the cuts will not impact the company's 300 mm production facilities.
In his most recent market forecast, Bill McClean, president of IC Insights (Scottsdale, AZ), said the IC industry is in the midst of the "Perfect Storm" because it's being impacted by three things: inventory burn, wafer start overcapacity and a significant economic slowdown. McClean notes, "Overall, IC Insights believes that favorable global economic conditions and balanced IC inventories will lead to a double-digit rebound in the IC market in 2002. In the current IC industry cycle, 2001 is shaping up to be an 'adjustment' year with 2002 likely to be a recovery year."