LEHI — The total cost of doing business in Utah compares favorably with the rest of the world, according to David Baglee, co-chief executive officer IM Flash Technologies Inc.
In less than a year and a half, IM Flash's Lehi plant has helped the company become an industry leader, Baglee said. IM Flash trailed its competition in per-unit cost by about 18 months when the joint venture of Intel Corp. and Micron Technology Inc. was formed in 2006. But now the company, which produced its first wafers of NAND flash memory chips in early 2007, is leading the pack.
While Asia might have a lower labor cost, Lehi fares better than both Asia and Europe for utility cost and quality, he said. And the Lehi work force is so good that it is currently teaching about 500 people from Singapore, where IM Flash will build its next plant.
"We have a superb work force," Baglee said.
Tax incentives, lower labor costs and the ease of working with the government in Singapore were likely factors in the company's choice to build a new plant there rather than expand the company's Lehi facility.
"Utah has been very generous to us," Baglee said, "but you've got to go to where you can make the lowest-cost product."
IM Flash, based in Lehi and with about 1,500 employees there, produces memory for a variety of personal electronic devices. Baglee, who also is vice president of Intel's Flash Memory Group, commended the work of IM Flash engineers — many who graduated from Utah universities — for helping the company progress.
"We've gone to the point now where we believe we have technology parity; we believe we have cost parity with the competition, and so we think that we're at about world-class cost relative to everyone else. This is great," he said. "The fact that it costs us the same enables us to survive."
IM Flash is ready to propel ahead of the competition with the development of a 34-nanometer, 32-gigabit NAND flash-memory chip. At one point, IM Flash had a 70-nanometer chip, then reduced it to 50 nanometers. The company is ramping up for the 34-nanometer chip, while the rest of the world is ramping up to a 43-nanometer product, Baglee said.
As a result, the company will be able to make electronics and computers more affordable, drive up memory demand and keep factories operating, he said.
This spring, with Intel seeing shrinking profits from NAND flash, Intel Chief Executive Paul Otellini said the joint venture is rethinking how much factory space it wants to devote to making NAND flash. But Baglee spoke optimistically on Thursday. Although he acknowledged that IM Flash is in an industry that goes through "some really wild swings," the company currently is the fourth-place NAND flash supplier worldwide, with about 12 percent of the market. It's also in a tough environment, where capital spending is intense — Intel's will probably be $5 billion to $6 billion this year — while the product's average selling price can drop as much as 50 percent annually.
"We're all out there slugging it out in a pretty brutal business," Baglee said.
Contributing: Associated Press.
E-mail: bwallace@desnews.com