A massive capital spending spree has been launched by Intel for 2011 that will see expenditure on a new fab and the migration of its leading-edge microprocessors to the 22nm node take capital expenditure to US$9.0 billion. Intel’s capital spending in 2010 had reached US$5.2 billion. The almost doubling in CapEx was due to increased demand for its microprocessors and the need to move from a three fab to four fab manufacturing base, while establishing production at the 22nm by the end of the year, according to Stacy Smith, Intel’s CFO during its fourth quarter financial analyst conference call.
Intel had already announced a massive new 300mm fab would be built in Oregon and would be 450mm wafer capable, late last year. The migration to the 22nm node is expected to be a considerable part of the increased spending budget, after a relatively frugal spend to migrate to the 32nm node, having claimed to offset almost half of the required capital investment at 32nm through reuse of equipment purchased for the 45nm migration several years before.
In October, 2010 Intel said it would build a new production plant called Fab D1X. Four other existing 300mm fabs would be upgraded for the volume production migration to the 22nm node at a cost of between US$6 and US$8 billion.
PC and server microprocessors, as well as a the Atom-based SoCs, serving smartphones, tablets, smart TVs, and other embedded devices will all be migrated to the 22nm node, lead initially and historically by PC and server microprocessors.
“The primary driver of what's taking us from a three factory model, three high volume manufacturing models to four high volume manufacturing model is the unit growth that we've experienced over the last couple of years and that we expect going forward,” noted Smith in the conference call. “I think you can really see how our business is growing when you look out what's happened over the last couple of years. In 2010 and with our focus for 2011, we're growing our revenues by $13 billion, that's more than a one-third growth versus where we were in 2008, where we were in 2009. So, you can see that businesses growth is a primary driver of what's taking us into a four factory model. Behind that what you are seeing as that we're being very aggressive of moving transistors to that leading-edge process technology and we do that, because we get paid for that process technology leadership. We get paid in terms of having lower costs.”
Paul Otellini, President and CEO noted in the call that the company was in the yield learning development phase with the 22nm process. This included running test chips and increasing the yields.
“We have completed the design of our first microprocessor and have working microprocessors on that technology. At this point in time our plan is to ramp production wafers of that technology in the second half of this year with products launched at some point to follow,” said Otellini.
With the increased capital spending, Intel executives noted that its equipment depreciation forecast would increase from US$4.2 billion in 2010 to US$5 billion in 2011.
According to Gartner, the biggest spender since 2005 has been Samsung, totalling nearly US$41 billion, nearly US$10 billion more than the former CapEx leader, Intel.
Intel also reported a record revenue year for 2010. Revenue reached US$43.6 billion, up US$8.5 billion from the previous year, a 24% increase.