Intel Plans More 200mm/300mm Fab Conversions

Judging from financial news reports, there was little in the way of hard news at Intel Corp's meeting with financial analysts in New York on Thursday.

The world's largest chipmaker reiterated its forecast to grow some 10 percent this year; the Wall Street consensus is for 11 percent growth.

At noon Eastern time today the company's stock was trading at $24.40, up slightly from Thursday's close of $24.26

But one interesting tidbit that did come out of the analyst meeting concerned Intel's capital expenditures. Intel, an early adopter of 300mm was one of the first major chipmakers to realize huge efficiency gains from the conversion of 200mm, or eight-inch wafers, to 300mm, or 12-inch wafers.

Now, the chipmaker is gaining additional capital efficiencies by doing what many in the past have suggested wasn't feasible – converting 200mm fabs to 300mm fabs, rather than building new ones. Intel first announced in early 2003 that it was converting a 200mm fab http://www.reed-electronics.com/electronicnews/article/CA277652 in Arizona to 300mm processing. Intel is now converting a second fab to 300mm, and said five other 200mm fabs could hypothetically be converted to 300mm, Simona Jankowski, an analyst with Goldman Sachs Inc., observed in a research note.

The 300mm conversion of an existing fab is only about a third of the cost of building a brand new 300mm fab, and addresses the issue of excess 200mm capacity, Jankowski noted. Intel’s four-year moving average of capex compared to sales is now down to 14 percent from 19 percent two years ago, which bodes well for depreciation and margins in the next couple of years, she said.