The new factory, dubbed Fab 32, will begin production of leading-edge microprocessors based on 45-nm process technology. Production will start at the second half of 2007. Construction is set to begin immediately.

Intel is currently developing its 45-nm process within its D1D 300-mm development fab in Hillsboro, Ore., which was first disclosed in 2001 (see May 14, 2001 story). But the new Fab 32 plant will become the company’s first high volume fab for 45-nm products, said Bob Baker, senior vice president and general manager of Intel's Technology and Manufacturing Group, during a conference call on Monday.

The chip giant is currently ramping up its 90-nm products, with 65-nm designs due out later this year. Intel’s Fab 32 will be required “for capacity [needs] in ’08 and ’09,” Baker said.

"This investment positions our manufacturing network for future growth to support our platform initiatives and will give us additional supply flexibility across a range of products," said Paul Otellini, Intel’s CEO, in a statement.

The project will create up to 1,000 new Intel jobs at the Arizona site over the next several years. During the construction phase, more than 3,000 trade people will be hired to work on the project.

For months, Intel had been mulling over plans to build a new fab and Arizona was in the running (see Jan. 15 story). Intel reportedly picked Arizona for the new fab over New Mexico, Oregon and various locations in Asia, according to analysts.

Today’s announcement also created some confusion, as Intel was reportedly expected to build a fab in Israel. Israeli Prime Minister Ariel Sharon told his cabinet Sunday (July 24) that the world’s largest chip maker, Intel, has decided to build a much-discussed second wafer fab in the country, according to a MarketWatch report which cited other media as its sources.

Sharon had told a cabinet meeting that Craig Barrett, Intel’s chairman, had told him the company has decided to invest about $4 billion to build another plant in Kiryat Gat in the southern part of Israel, according to the report (see July 25 story).

Intel did not rule out the possibility about building a new plant in Israel. “We aren’t prepared to make an announcement on Israel,” Baker said.

For months, the Arizona state government had been pushing hard for the new fab. In May, the Arizona legislature approved an $8.2 billion budget package — a move that could pave the way for Intel’s fab expansion plan in the state. Reportedly aimed to please Intel, the so-called “sales tax” measure included tax cuts for businesses (see May 6 story).

The plan

Meanwhile, when completed, Fab 32 will become Intel's sixth 300-mm wafer facility. The structure will be about 1 million square feet with 184,000 square feet of clean room space.

Intel currently operates four 300-mm fabs that provide the equivalent manufacturing capacity of about eight 200-mm factories. Those factories are located in Oregon, Ireland and New Mexico.

The company also has an additional 300-mm fab currently under construction in Arizona (Fab 12) scheduled to begin operations later this year, and one expansion in Ireland (Fab 24-2) scheduled to begin operations in the first quarter of next year.

Last year, Intel started a $2 billion construction project to convert a separate Chandler-based fab from a 200- to 300-mm facility. The conversion of Fab 12 in Chandler is scheduled to be completed in late 2005. The converted facility will begin initial production on 65-nm process technology (see April 21, 2004 story).

Separately, Intel said it will invest $105 million dollars to convert an existing inactive wafer fab in New Mexico to a component temporary test facility. The project will provide additional test capacity to the company's factory network for the next two years and will result in an additional 300 jobs at the New Mexico site during that period.