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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Tony Viola who wrote (61233)	7/27/1998 4:18:00 PM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Tony & Intel Investors - Intel Modifies their Flash Manufacturing Strategy Here's a report from Dataquest describing a modified (AGAIN) Flash Manufacturing strategy - which may be MORE AGGRESSIVE than the previous strategy. Note the final comment about AMD. Paul {===============================} Intel Shifts Flash Manufacturing into Overdrive Intel has quietly made another major shift in its flash memory manufacturing strategy. In case readers missed the last episode, here is a re-cap: In 1996, Intel announced with great fanfare the first "memory only" fab in years, to be constructed with government assistance in Israel for a total cost of about $1 billion. Late last year, this plan shifted with the acquisition of Digital Equipment Corporation's chipmaking plant and a more realistic forecast of PC unit sales. Intel said it would defer a new fab in Texas and use Fab 18 in Israel for microprocessors instead of flash chips. Intel still needed the flash capacity, so it decided to invest the floating $1 billion in Fab 9, located in New Mexico, the United States, using a slightly modified version of its 0.25-micron logic process. Now, Intel is saying that it has changed its mind again. It will ramp up another New Mexico fab, Fab 11, currently making Pentium processors with a 0.25-micron process. Since 0.18- micron logic capacity is increasing more rapidly than forecast, Fab 11 at a quarter micron will have space for flash, but it still needs a capital infusion of $1 billion. Since Fab 11 is more advanced than Fab 9, Intel gets "better bang for the buck" and can use the money in the processor wars. Speaking of 0.18- micron technology, the company says the internal development samples of flash devices with this lithography should come by the end of this year. As seen in Table 2, Intel is ramping Fab 11 quickly and believes it will beat internal goals to have 30 percent of bit be delivery with the new facility, well ahead of its nearest competitor, the Advanced Micro Devices Inc. and Fujitsu joint venture, FASL, in Japan. Although unlikely, on paper Intel could supply the entire worldwide demand for flash memory from Fab 11 if it were converted exclusively to memory! What probably would happen is drafting off another logic fab, say in Ireland. Table 2 Intel Flash Fab Capacity (Millions of Megabytes) ============================================================== 1996 1997 1998 1999 2000 Fab 9/Fab 11 13 36 62 167 395 Sharp 18 38 49 51 51 Fab 7 54 56 90 97 82 Total 85 131 200 315 528 Difference (%) 55 53 58 67 ============================================================== Source: Intel, Dataquest The bottom line here is that Intel is serious about staying a major player in the flash market and knows that the only way to do this is reduce its chipmaking cost so it can outprice the competition in key deals. Doing this at the fab level, in addition to new technologies like multilevel cell (MLC), will give it an advantage in a very competitive market. Watch out, AMD!