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Intel delays Texas plant again

The move seems to underline the effects of increasingly fast product cycles in the chip industry, which is creating unwanted surpluses.

Intel (INTC) again pushed back the opening of a microprocessor production plant outside Fort Worth, Texas, calling for a complete halt to construction of a $1.3 billion facility that was originally slated to open in 1999.

"Fab 16" won't come online until 2002, when it will produce chips on 300mm wafers in the advanced 0.13 micron process, an Intel spokesman said. The chip giants's most advanced chips now are made on 200mm wafers in the 0.25 micron process. Larger wafers are more economical because they can accommodate more chips; smaller micron measurements mean more transistors can be packed into the same-sized chip.

The move seems to underline the effects of increasingly fast product cycles in the chip industry, which is creating unwanted surpluses because previous generations fall out of demand with the arrival of newer products. While 300mm wafers are already being sampled in some cases, the 0.25 micron process is the state of the art, and the 0.18 micron process is next in line.

Both slackening demand and the desire to get ahead of the product cycle are likely factors in Intel's decision.

"We've projected to have the capacity to meet the market demand [in the next few years], which gives us the capacity to skip a generation and come online with the next-generation process," the company spokesman said, adding that continuing construction would have meant the plant would have required retrofitting to upgrade from 200mm to 300mm wafers.

In October, Intel said it would push back to 2000 the Fort Worth opening because it estimated that demand for flash memory chips would not require the full capacity of a Kiryat Gat, Israel, plant that's due to open in 1999. Originally designed to produce only flash memory, the Kiryat Gat plant is now scheduled to make both microprocessors and flash memory chips.

Intel, an investor in CNET: The Computer Network, has already spent about $75 million on the project.