Intel Will Not Be Opening Up Its Fab 42 Plant in Arizona

CommanderFrank

CommanderFrank

Cat Can't Scratch It
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The announcement earlier this week of Intel laying off 5% of its workforce has affected not only Intel company personnel, but is taking its toll of its Fab 42 plant in Arizona.

Intel has shrugged the facility off, with the chipmaker stating that its fab utilization remains at 80%, and that it doesn't need to spend money on a new facility right now.
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Makes sense. Intel I believe intended Fab 42 to introduce a combination of 450mm wafers and 14nm process. Now that 450mm appears to be in jeopardy or at least is facing a significant delay, it's more economical to upgrade the 300mm equipment in current fabs than to outfit a new fab with equipment that may end up being outdated in a few years. Much cheaper to wait and leave the fab building sitting, especially given the 80% utilization rate.
 
I actually find it suprisibg intel is laying off 5 percent of its workforce. Stuff must be worse than I thought.
 
It's been incredible to watch that factory go up. Now it's going to sit there and collect dust and who knows what else. It's a tough blow to the AZ economy which has been turning upward recently.
 
Answer me this, if Intel has all these fab's in the USA then why are their products finalized in Costa Rica or Malaysia?
Would it not be more economical to just finish them in house instead of shipping them around the world?
 
ep0x73 said:
Answer me this, if Intel has all these fab's in the USA then why are their products finalized in Costa Rica or Malaysia?
Would it not be more economical to just finish them in house instead of shipping them around the world?
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Sort of the chip itself is only one part and a small part at that. You can ship so many of them so cheap. But what if the cardboard, plastic, metal and other materials come from somewhere else? If all the parts come from all over the globe it really doesn't matter where you assemble so you do it where it is cheapest for the labor.
 
ep0x73 said:
Answer me this, if Intel has all these fab's in the USA then why are their products finalized in Costa Rica or Malaysia?
Would it not be more economical to just finish them in house instead of shipping them around the world?
Click to expand...

Labor in Costa Rica and Malaysia is 3-4x cheaper than USA.
 
PCunicorn said:
I actually find it suprisibg intel is laying off 5 percent of its workforce. Stuff must be worse than I thought.
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The 5% is from plants they were closing anyways, division reshuffling and various retirement packages to encourage people to leave. It's not officially a layoff.
 
ep0x73 said:
Answer me this, if Intel has all these fab's in the USA then why are their products finalized in Costa Rica or Malaysia?
Would it not be more economical to just finish them in house instead of shipping them around the world?
Click to expand...
This is pretty much industry standard. While most fabs are in the US or other developing countrys, the test and assembly houses are in Asia or other less developed countrys. I can't think of anyone who does packaging in the US. From my understanding, it is for tax purposes. Shipping a wafer carrier really isn't that expensive compared to the other costs of producing the wafers.
 
PCunicorn said:
I actually find it suprisibg intel is laying off 5 percent of its workforce. Stuff must be worse than I thought.
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To its stock price. :p

Intel stated that the 5% reduction would be done through a combination of things, including retirement, voluntary leave and other ways. "normal attrition rate is 4% a year" so 5% doesn't really signal something major.

Things are pretty bad in the PC space. PC sales were down 10% last year, with Intel not taking the brunt of that decline (PC Unit sales were down 4% for the year, but up by 11% in Q4). Overall, Intel's revenues declined 1% in 2013 vs 2012, which means growth was stagnant and is the biggest financial sin of all. AMD reports financial results on Tuesday, so we'll see if the bad PC market hit AMD any harder in 2 days.
 
ep0x73 said:
Answer me this, if Intel has all these fab's in the USA then why are their products finalized in Costa Rica or Malaysia?
Would it not be more economical to just finish them in house instead of shipping them around the world?
Click to expand...
Probably lots of reasons, including tax benefits/subsidies in FTZ and shifting of taxable income to other venues. A $6000 completed wafer is worth at least 3-4x more as finished products.
 
siliconnerd said:
This is pretty much industry standard. While most fabs are in the US or other developing countrys, the test and assembly houses are in Asia or other less developed countrys. I can't think of anyone who does packaging in the US. From my understanding, it is for tax purposes. Shipping a wafer carrier really isn't that expensive compared to the other costs of producing the wafers.
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Totally understandable, it's just surprising after the NAFTA BS that final production was not done in Mexico being so close by, much less transportation costs.

Costa Rica is around the corner but Malaysia certain is not.
 
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