LONDON — Two weeks after dismissing the idea of Intel Corp. building a trailing-edge 90-nm process wafer fab in China as "wishful thinking" by Chinese authorities, Gartner Inc. analyst Bob Johnson has reanalyzed the situation and decided that "the new fab makes complete sense."
The key thing that has changed since March 19, when Johnson made his original comment, is that Intel has announced plans to build a trailing-edge 90-nm wafer fab in China (see March 26 story).
Johnson, writing in a weekly Gartner newsletter on March 19, said that such a move by Intel would not make sense and is contrary to previous patterns of Intel behavior. At the time he pointed out that Intel's manufacturing strategy has been to stay at the leading edge of technology and that by the time a China fab using 90-nm technology was up and running Intel would be ramping 32-nm manufacturing. Johnson's secondary argument was that Intel has not put a plant down on a greenfield site for many years.
Two weeks later and writing again in the Gartner DQ Monday report, Johnson argued that a look into the finances behind the Dalian fab might lead to a different conclusion. Johnson speculates in the report that Intel may have negotiated a financial incentive of close to $1 billion to build in China.
With Intel getting the shell of its Dalian fab essentially for free and moving used equipment in from other fabs to kit it out, Johnson said Intel will be able to upgrade its existing 65-nm process fabs, such as Fab 12 in Chandler, Arizona and Fab 24 in Leixlip, Ireland, ultimately to 32-nm production.
"The bottom line is that Intel will get an older fab in a new location for minimum cash outlays, and it will free up space in its premier fabs for the latest and greatest technology without having to build new facilities to do it. Looking at it that way, the new fab makes complete sense," concluded Johnson.
One thing that Johnson does not address is that building for the trailing-edge does represent a change of strategy by Intel and that it is hard to conceive what use Intel would have for a 90-nm process in 2010.
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