Intel Israel released a press release in April announcing its intentions to submit to the government of Israel a proposal to upgrade its fab in Kiryat Gat. In that release, Intel highlighted its historical activities in Israel but did not give any specifics regarding the fab's upgrade, including size of investment or a timeline.
We at Chiportal decided to update our readers exclusively with the background details that we were able to get from sources who wish to remain anonymous.
On December 2012 Micron announced it would close its fab in Israel, which produces NOR memory chips, in two years. The announcement of the plans for closure caused much concern to Micron's Israeli employees, who decided to work with external consultants on a new business plan to turn the facility into an analog fab and also bring in new investors to acquire the fab from Micron Inc.
After six months of planning, including approval by Micron Inc. for an MBO, a short call cancelled it all. Brian Krzanich, the new Intel CEO, called Micron's CEO Mark Durcan to express renewed interest in Micron's Israeli fab. Durcan agreed immediately to return the fab into Intel's hands."
The fab was originally built as Intel's fab 18 with investments of more than $2B US, but the main reason that led Durcan to agree with Intel's request has to do with the shared interests of Intel and Micron on the global level.
At the beginning it wasn’t clear whether Intel wanted to get back the fab (that was leased to Micron on a long term basis) in order to prevent the entrance of one of their rivals in the semiconductor into their territory or if they had a more sophisticated goal. But the move was completed at the end of 2013 after Intel re-hired (per the request of Micron's management) 80% of Micron's permanent employees in Israel.
It's been five months since the fab was returned to Intel, and we now know exactly why Intel wanted it back. Approximately three years ago, when Intel considered building a new fab with 14 nanometer technology in Israel, Ehud Kaplan, Program Office Manager at Intel Israel, made some checks. He discovered that to upgrade the current fab from 22nm to 14nm would require not only modifications to the production machines but also a significant expansion of the clean room.
Following Intel's decision to build that fab in Ireland, the program was put on hold. But in the last year the plan was taken out of the drawer.
When Mooly Eden, Intel Israel President, and Maxine Fasberg, GM of the Israeli Fabs, thought about the future Intel Israel they realized something important: In order to ensure the continuity of the production in Israel they needed to ensure that Intel Israel was included in the next generation of Intel planning for the production of the 10 nm technology. To do that they had three options:
- Build a new fab from scratch -- the cost of this option was estimated to be $8 billion to $10 billion US.
- Upgrade the existing fab while increasing the clean room space from 200K to 300K sqf. This option included the cost for erecting another building, issuing a building permit, and building a new system for neutralizing sewage and catching gasses. All those actions meant not only money but also extensive time.
- Connect Micron's clean room to one of Intel's while upgrading it from 200 to 300-mm wafers. While this option involved technological changes and a cost of $5 billion to $6 billion US it was still the cheapest and the fastest option.
As long as Micron Israel was producing memory chips for its owners, the third option was not real but after realizing that Micron wants to sell the fab in Israel, Intel's management contacted Intel corporation and asked to take advantage of this unique opportunity. Luckily the heads of the Intel Corporation thought the same and cooperated with them on the move, which was accelerated in the last few months until the current announcement of Intel on their intentions to upgrade their fab in Israel .
The upgrade of Micron's fab into 300-mm technology still requires major modifications like lifting the fab's ceiling and other major changes. However, it is still close to the current Intel fab, includes swage neutralizing system and has the proper manpower that could be trained to operate the new equipment of a 10-mm fab.
In June, Intel will conclude its commitment to produce memory chips for Micron and then could start the conversion of the old memory fab to part of a 10 nanometer fab -- Intel's most advanced technology. The upgrade process is expected to take 12 to 18 months and when complete Israel can be proud of having not only the most advanced chip design centers but also the most advanced fab in the world.
This article was originally published on the Hebrew-language website of Chiportal. Chiportal is the major on-line source for information and communication between all professionals involved with the Israeli microelectronics industry. Chiportal was founded by TapeOut Magazine - the most popular magazine in the Israeli semiconductor industry and is serving engineers, technical experts, senior executives, vendors, consultants, subcontractors, and investors.