Intel gears up to build new Israeli plant-analyst
Fri Sep 16, 2005 01:45 PM ET
By Eric Auchard
SAN FRANCISCO, Sept 16 (Reuters) - Intel Corp. (INTC.O: Quote, Profile, Research) , the world's largest computer chip maker, is preparing to begin construction on a major new chip production plant in Israel, an analyst said on Friday, citing industry sources.
Moors & Cabot analyst Shekhar Pramanick said in a research note to investors that he had learned from equipment suppliers to Intel and from observers on the scene in Israel that clearing work had begun at the proposed plant site.
However, Intel spokesman Chuck Mulloy said his company had not announced any new projects in Israel and denied that construction was underway on a new plant.
"We are in discussions constantly with countries around the world about potential new facilities," Mulloy said. "We have not announced anything with respect to Israel, nor have we denied anything."
Pramanick said his sources said preparatory work may have begun at a new, yet to be announced, Intel fabrication plant in the southern Israeli town of Kiryat Gat, which is likely to be called Fab 28.
The facility would be geared to produce chips used in the latest 300 millimeter wafers and could cost in excess of $2 billion, roughly one-quarter to one-third of which would be drawn from Israeli government subsidies, he said.
In July, Israeli Prime Minister Ariel Sharon said Intel had informed him that the U.S. electronic chip giant planned to build another plant in Israel with an investment of up to $4 billion.
Intel declined to comment on Sharon's remarks or the speculation that followed about the plant, which has attracted lobbying from several other countries. Spokesmen for Sharon, who is in New York attending the United Nations World Summit, were not immediately available to comment.
APPLIED MATERIALS, OTHERS LIKELY TO BENEFIT
Pramanick does not directly follow Intel but covers the semiconductor production equipment makers and custom chip foundries.
He acknowledged that there are a "lot of ifs" in his construction scenario but said the level of activity he is aware of between Intel and its equipment suppliers suggests that the project is set to get underway.
"Intel could decide to do initial work but never fill the fab for a year or two," he said, referring to high-tech production gear needed to build chips.
The long lead times necessary to build and install production equipment give equipment makers insight into chip makers plans, even ahead of official announcements, he said.
Pramanick said the biggest beneficiaries of Intel capital spending next year are likely to be Applied Materials Inc. (AMAT.O: Quote, Profile, Research) , ASML Holding NV (ASML.O: Quote, Profile, Research) , Cymer Inc. (CYMI.O: Quote, Profile, Research) KLA-Tencor Corp. (KLAC.O: Quote, Profile, Research) , Novellus Systems Inc. (NVLS.O: Quote, Profile, Research) and Teradyne Inc. (TER.N: Quote, Profile, Research) .
"We believe that if Intel proceeds with construction at the expected pace, the new fab's clean room could be ready in 9-12 months," Pramanick wrote. Tool deliveries from equipment makers could begin "sometime around 3Q06 (third quarter)," he said.
The plant could employ 2,000 workers in Kiryat Gat, which is home to another factory that makes Pentium processors and other Intel chips. Intel employs nearly 6,000 in a variety of chip manufacturing plants and development centers in Israel.
In 1999, Intel built Fab 18 in Kiryat Gat, with a total investment of $1.6 billion, including government subsidies. |
