Intel puts new Arizona chip factory on back burner

After pledging to invest $5 billion on its Fab 42 high-tech manufacturing plant, the chip maker puts the project on hold.

Intel's Fab 32 chip factory in Chandler, Ariz., opened in 2007. Intel

The use of Intel's most heralded factory is being put on hold indefinitely. The company's "Fab 42" manufacturing plant in Chandler, Ariz., which was slated to make high-tech microchips, will not be opening up for shop anytime soon, according to Reuters.

"The new construction is going to be left vacant for now and it will be targeted at future technologies," Intel spokesman Chuck Mulloy told Reuters.

Intel began construction on Fab 42 in 2011. The plant was expected to produce Intel's next generation of processors built on its 14-nanometer technology. At the start of construction, the company said it was investing more than $5 billion in the facility.

President Obama visited the plant in January 2012 and commended Intel for creating US jobs. He also mentioned Fab 42 in his State of the Union address last year saying, "After locating plants in other countries like China, Intel is opening its most advanced plant right here at home."

While Intel is not putting Fab 42 to use for the time being, it's upgrading other factories at the same site, according to Reuters. The company said it's converting the 22-nanometer manufacturing equipment in its older plants to also make 14-nanometer chips.

"It boils down to better capital utilization," Mulloy told Reuters.

When contacted by CNET, Mulloy said construction of the site was complete. But, instead of focusing on the newest 14-nanometer chip manufacturing processes, Mulloy said the company will wait and use the building for future technologies.

"The new manufacturing facility, which is completed, is targeted for future technologies," Mulloy said. "The new construction was originally slated for 14nm, but through an ongoing drive in manufacturing efficiencies Intel was able to continue to use its existing buildings for 14nm. This allows us to maintain the new building for additional capacity flexibility and future technologies."

Mulloy also said the company has surpassed its goal of hiring more than 1,000 employees since beginning construction on Fab 42.

A sluggish PC market may be one of the causes of Intel's slowdown. A report from last April said the company wasn't churning out chips at the usual rate and that factory utilization was down around 60 percent. Analysts said this was because PC shipments had been lower than expected.

As tablets and smartphones continue to replace PCs, the market doesn't appear to be getting any better. A report from Gartner last week showed that 2013's worldwide PC shipments, including desktops and laptops, were down 10 percent from 2012.

Update, January 15 at 3:05 p.m. PT with comment from Intel spokesman Chuck Mulloy.

Correction, January 15 at 3:05 p.m. PT to state that construction on Fab 42 is complete. The story previously inferred that construction was ongoing.

 

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