Intel is delaying opening its 14-nm Fab 42 in Chandler, Arizona

1/16/2014 11:58 AM EST  EETimes

NEW YORK — Intel is delaying opening its 14-nm Fab 42 in Chandler, Arizona, as demand for PC microprocessors continues to decline. As reported by Reuters, the facility was initially intended to produce Intel’s most advanced processors beginning at the end of last year. Instead, the plant will remain closed indefinitely and other plants at the same site are to be upgraded. The move is more market-driven than indicative of any issues with Intel’s processor technology or manufacturing, said Charles King, president and principal analyst at Pund-IT told EE Times. “The company said it will be retrofitting three other plants with new technology rather than opening a fourth,” he said. “They are probably seeing a lower demand in some of their product areas than they have anticipated when they planned the facility." Considering the pressure that traditional PCs and laptop markets have been under along with Intel move into smartphones, the decision makes sense, said King. Intel could not possibly go ahead with a facility that produces processors for which there is no demand. “If the orders aren’t coming in it would be ludicrous for Intel to increase manufacturing,” King said. "It is a significant move because it’s a fairly large facility." Rob Lineback, senior market research analyst at IC Insights, told EE Times. "It is a push-out or push-back of using that facility. Keep in mind that facility was earmarked for the next generation wafer size transition from 300 to 450. That move is delayed by the industry, even though Intel and others are trying to make it more feasible.” Lineback continued, “They decided they don’t need the extra capacity for microprocessors. We’re all kind of in agreement that it was the worst year for PC shipments since the 80s as far as percentage decline." Today's Intel fourth quarter earnings call will be interesting, said Lineback.

Everyone in the industry is waiting to see what their capital expenditures will be for 2014, which will be discussed today, whether they keep the level at above ten billion dollars or not. Only Samsung is investing more money in wafer fabs than Intel. Intel has been the largest capital works spender in the industry since the 90s, until Samsung passed them in recent years, pushing hard on several fronts. Whether this is a real pull back, a real slow down for Intel, we’ll find out more this afternoon.

— Zewde Yeraswork, Associate Editor, EE Times