RIO RANCHO, N.M. — It might have been the worst of times for a $2 billion expansion to make faster microprocessors for home computers and other systems, but Intel did it anyway.
It is the best of times for Rio Rancho, though.
Intel Corp. is producing 300mm wafers, one foot in diameter, here at Fab 11x. The new 1 million-square-foot wing has been tacked onto Fab 11 in less than two years and was already in production when dedicated Oct. 23.
The dish-size wafers, full of Pentium 4 processors, will carry the speed of desktop computers past the 4-gigahertz-per-second milestone, says Ray Carey, one of four engineering managers at Fab 11x.
"We're in one of the worst downturns ever in the history of the industry," said Nathan Brookwood, analyst with Silicon Valley-based Insight 64. "Last year, industry sales were off 33 percent."
But what could Intel's managers do? They started the machinery rolling for the expansion more than two years ago — "back when the industry was moving very strongly," said Brookwood.
They couldn't just stop. For better or worse, Brookwood said, "I think they did it. It's part of their cost structure now." They anticipate roughly a 30 percent savings on production costs, he said.
But they are producing processors that are not necessarily in demand yet, Salomon Smith Barney analyst Jon Joseph said in San Francisco.
"They've got to absorb excess capacity, and to do that they've got to see an upturn in the PC market," Joseph said.
Fab 11x is not at full capacity yet. Its wafer-making tools are still arriving and have not yet filled the factory floors. It may be months before the work force reaches the 2,000 employees who are expected to oversee the fully automated areas where metals and other materials are inlaid into the wafers that will run next-generation PCs.
Maximum output is a trade secret, but they haven't hit it yet, says Carey.
"It's the most advanced chip plant in the world, in size, in technology, in virtually every indicator that you can look at," said Intel Vice President Bruce Leising. "It is the start of the next decade in the semiconductor industry that you are observing."
Intel Vice President Bob Baker cautioned that "during the current economic times, it's very difficult, it's complicated, it takes risk."
"To build a facility like this means we have to have confidence in the future, confidence in our people here in New Mexico, and we have that confidence," Baker said.
It's a long-term commitment and bond, company to community.
"It's very, very good for the community and the state as a whole," City Administrator James Jimenez said. "They're our No. 1 economic ace employer," offering about 6,000 jobs.
Rio Rancho, a community just sprouting 10,000 strong on a tumbleweed-flecked mesa 22 years ago when Intel arrived, is pushing 55,000 today and is expected eventually to overtake Santa Fe as third-largest city in the state and perhaps Las Cruces as second-largest. It's celebrating the addition of 500 new Intel jobs instead of layoffs that had been expected, Jimenez said.
"It just doesn't get any better," said Sen. Pete Domenici, R-N.M., during the dedication. He promised Intel will benefit, too, from new developments in super-miniaturized nanotechnology at Sandia National Laboratories.
Intel also makes microprocessors in Arizona, Oregon, Massachusetts and California, but Rio Rancho has always been a plum for Intel because of its high-tech work force, proximity to Sandia, good relations with local officials and modest land costs. Rio Rancho returns the compliment.
"I think they have been a very good corporate citizen," Jimenez said.
Intel contributed the $30 million that built the state-of-the-art Rio Rancho High School, then the company opened computer clubhouses for students and encouraged its employees to participate in civic improvement, civic management, he said.
More than anything, the commitment means opportunity in a city and a state that aren't generally ranked among the most prosperous.
"My 21-year-old daughter doesn't want to come back to New Mexico and be a farmer," Jimenez says.
The automated assembly lines move the wafers from tool to tool, work area to work area at Fab 11x, until all the components are sandwiched and sealed, theoretically without requiring contact with human hands.
Besides Pentium 4, the expanded plant will build Pentium 3 Mobile and other processors, Intel spokesman Chuck Mulloy said.
Jimenez, who toured the plant recently, says it reminds him of a job he once had in Alaska helping automate a salmon cannery — "from a fresh fish to a can of salmon."
Fab 11x's 1 million square feet includes 200,000 square feet of clean-room space, bringing the total available at Intel-Rio Rancho to more than 700,000 square feet.
The new wafers are much larger and have more than twice the number of chips as the old 8-inch-diameter wafers, and they have some of the industry's smallest circuitry — just 130 nanometers, heading down to 90 nanometers next year. A nanometer is about one-10,000th the diameter of a human hair.