Intel Setting Aside Big Bucks for Manufacturing Expansion

Intel Setting Aside Big Bucks for Manufacturing Expansion

Chipmaker said it is increasing its cap-ex budget by nearly $4 billion this year.

On the heels of its most profitable year in company history, Intel Corp. has unveiled a $9 billion 2011 budget for capital expenditures.

The expanded budget includes plans to add a fourth high-volume chip factory, which will deploy Intel's next-generation 22-nanometer microprocessor technology, company officials said.

The $3.8 billion increase in Intel's cap-ex budget is driven by strong revenue growth, particularly in the company's PC and server segments, CFO Stacy Smith told investors during Intel's fourth-quarter 2010 earnings call earlier this month.

"The primary driver of what's taking us from a three-factory model -- three high-volume manufacturing [facilities] to four high-volume manufacturing [facilities] -- is the unit growth that we've experienced over the last couple of years and that we expect going forward," Smith told investors.

This past October, Intel announced plans to build a new development "fab" at its Ronler Acres Campus in Hillsboro, Ore.
For full-year 2010, the Santa Clara, Calif.-based microprocessor manufacturer reported record revenue of $43.6 billion -- a 24% increase over 2009 -- and record results for operating income, net income and earnings per share.

In October, the company announced that it will spend billions of dollars "on future generations of manufacturing technology in its American facilities." The investments will include construction of a new development fabrication plant (commonly called a "fab") in Hillsboro, Ore., and upgrades to four existing fabs -- two in Chandler, Ariz., and two in Hillsboro -- to support the transition to 22-nanometer process technology.

"Intel makes approximately 10 billion transistors per second. Our factories produce the most advanced computer technology in the world and these investments will create capacity for innovation we haven't yet imagined," Brian Krzanich, senior vice president and general manager of Intel's Manufacturing and Supply Chain, said in October.

For 2011, the company has set aside $7.3 billion for R&D, an 11% increase over 2010.

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