Monica, Re: "If Intel continues to take market share from AMD, at 1% to 2% per quarter, Intel will need that extra capacity for CPU and chip set production."
Not likely. Market share that Intel steals from AMD is peanuts. Demand will eventually pick up as corporate spending increases, and that will be more significant than gains that Intel could get from AMD; however, it's still not likely to fill up all the "potential" fab space that Intel has.
By "potential", I mean all the fabs that Intel now uses, plus the fabs that they intend to build. If you add all that up, then overcapacity is what you get. That's why I think that Intel intends to decommision many of their current fabs in order to transition to more state-of-the-art facilities.
If you look at a recent article posted on this forum, you will see that Intel's most likely future is to decommision several .18u megafabs, and replace them with newer facilities, two of which are 300mm. Fab22 in Arizona is a 200mm .13u fab that will likely replace fab12, since it is located at the same spot. Fab11x is a 300mm .13u fab, and it will also likely replace fab11 in New Mexico. I also believe Fab24 (300mm and 90nm) will replace fabs 10 and 14 in Ireland.
This will give Intel more efficient and lower cost output. Of course, there are costs involved in decommisioning facilities like fabrication plants, but they may get enough revenue from salvaging some of their older equipment to balance things out.
What will be the most strategic aspect of this new construction is that they are most likely already planning for 90nm and 65nm manufacturing nodes with the design structure of their new facilities. This way, they avoid renovation costs when their older fabs aren't up for the newer specifications.
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