Intel Mothballs Brand New Chip Factory

More evidence of the PC’s industry’s pain as Intel shelves plans to open a state-of-the-art chip factory

Intel has opted not to open a brand new factory it has already constructed in Arizona, as the PC slump continues to bite hard.

Intel’s decision comes despite the fact that the chip giant had invested a whopping $5.2bn (£3.2bn) to build the factory, alongside a number of other chip fabs at its Chandler, Arizona site .

Future Technologies

Intel’s confirmation that it would not open the brand new facility, known as Fab 42, was first revealed by Arizona Republic.  The new factory will apparently remain closed for the foreseeable future while other factories at the same site are upgraded.

Intel-LogoThe new factory was meant to create 1,000 jobs for the local area, and it is reported that while Intel has already hired these new workers to complement its 11,900 strong-workforce at the facility, no staff will be employed at Fab 42. Intel hopes to eventually use the plant for “future technologies.”

“Those jobs have been created, but employees are doing the work initially attributed to the new facility elsewhere on Intel’s Ocotillo Campus,” Intel spokesman Chuck Mulloy told Arizona Republic. “It will be used for future technologies at a future date.”

“It doesn’t matter which building they work in; we’ve already increased the workforce by more than 1,000 people at that work site,” Mulloy was quoted as saying. He then went on to say that Intel made the decision to build the older 22-nanometer process and the new 14-nanometer process in the same facility, rather than the new factory: “…we can more effectively and efficiently use the capital dollars in the existing facilities and double the use of the tools.”

Mulloy meanwhile told Reuters that while the Fab 42 factory already has heating and air conditioning, the expensive capital equipment is not there.

PC Decline

Intel’s Fab 42 plant had been touted as the world’s most advanced high-volume semiconductor-manufacturing facility, and President Barack Obama called it a symbol of the future of US manufacturing, when he visited the construction site back in January 2012 to give a speech.

“I’m here because the factory that’s being built behind me is an example of an America that is within our reach,” Obama said at the time. “An America that attracts the next generation of good manufacturing jobs. An America where we build stuff and make stuff and sell stuff all over the world.”

Intel’s decision was taken against a backdrop of a global PC industry in decline. Sales of PCs fell by as much as 10 percent last year worldwide, according to research firms Gartner and IDC.

Both firms recorded a widespread decline in PC sales as consumers increasingly turned to tablet and mobile devices. The poor uptake of Microsoft’s Windows 8 operating system has not helped matters.

The fourth quarter is normally a healthy buying time for PCs and laptops, but Gartner recently reported that sales 6.9 percent fell to 82.6 million units worldwide in the last quarter of 2013 compared to the fourth quarter of 2012. This marked the seventh consecutive quarter of shipment decline, and signalled the end of what Gartner called, “the worst decline in market history”.

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