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Replacement Analysis
The $2 Billion Upgrade
In February 2003, Intel. CorPoration announced it was planning to spend $2 billion to
modernize and update its silicon wafer manufacturing plant in Chandler, Arizona. The
upgrade will allowIntel to manufacture 300-millimeterchips, rather than the 200-:millimeter.
size it had been producing at the plant, known as "Fab 12."The project is also expected to
double manufacturing capacity at the facility, while lowering overall operating costs.
Upgrade work will probably take over a year to be completed. It will
include remodeling the interior of the plant, and will require Intel to buy
new wafer fabrication tools.
Despite the seemingly huge price tag for the project, Intel states that it
will be saving money by upgrading the existing fabrication facility instead
of building a new one. The company also noted that, by deciding to remain
in its current location,it wouldbe able to retain its current workforce,which
is highly skilled.
Moreover,the new,larger wafer will accommodatemore chips, which
should lower production costs at the plant. The upgraded plant will also
use a newer process that allows chips to hold smaller and faster transistors.-.
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