When a new factory is much more than just a new factory

I live in Arizona. I’ve been here for more than 14 years – and I love it here. Home, on the other hand, will always be Michigan. Detroit, to be more specific. Everybody in Detroit seemed to work in one way or another for the automotive industry. I had relatives at Ford, at auto suppliers, even steel plants. I actually started down this Eco/CSR path at Ford myself. No matter how bleak the industry got with foreign competition and rust-belt headlines day after day, people were proud to live there and work in that industry.

So what does that have to do with Arizona and the title of this blog? Well, now I work in an industry that has its own set of global challenges, but I work with people who are proud to work at this company and in this state for many of the same reasons. And many of my neighbors also work in high-tech. I don’t know if they have the same passion for the latest chipset as my Detroit friends do for the latest Shelby Cobra – but that’s a subject for another blog.

Three billion dollars. That’s not just a lot of money. That’s more money than I can even comprehend. That’s the investment Intel made in opening its newest state-of-the-art factory in Chandler, Arizona today. It will be known as Fab (for fabrication facility) 32.

So, why write about this in a CSR blog? Well, I’m glad you asked. Not only is this Intel’s newest factory. It will also be among Intel’s most environmentally friendly factories on the planet. We have designed in a number of energy and water conservation measures that will have a long term positive impact – not only in Arizona, but in other similar factories around the world.

From an operational perspective, our latest 45nm manufacturing process results in a 15% reduction in global warming emissions, and Fab 32 makes use of our innovative water conservation and reuse program which conserves more than 70% of the water used on site. And from a product angle, the factory will be producing the company’s most energy efficient processors to date, processors that are both lead-free and halogen-free.

But the building itself represents more than that. We will also be seeking official Leadership in Energy and Environmental Design LEED green building certification for the factory based on new criteria being developed for facilities of this kind.

That’s all great news and makes many of us at Intel proud. However, I want to tie that back to Detroit and the subject of globalization. The world is different today than it was even 10 to 20 years ago. U.S. based companies are doing business all over the world. There seems to be a general perception that companies will always search for the lowest common denominator in terms of cost. The real story is much more complex than that. Intel wants and needs to go where the best business environment is. That means employees, infrastructure, security, logistics and a host of other features….including cost.

I see a lot of press these days that seems to paint a picture of high-tech moving overseas. Of course we continue to expand to meet our customers’ needs – all over the world. However, I live here – my children live here – and I want to see the U.S. fight to be the most competitive nation on the planet. I know as Intel, we’ve invested millions of dollars and thousands of volunteer hours to make our schools and educational systems better everyday.

We all still have a lot of work to do to keep the U.S. competitive in the globalization picture. But next time you read an article about high-tech moving off-shore – ask yourself – how many companies do you know that have invested $3 billion dollars in a single factory and more than $8 billion over the last couple years to develop state-of-the-art manufacturing capability and high-tech jobs in the U.S.?

I hope you’ll recall at least one.

16 Responses to When a new factory is much more than just a new factory

  1. Igor says:

    I have heard that your Fabs consume enormous amounts of electricity. Two questions arise:
    1. Have you done anything to reduce power consumption by your fab and its production tools?
    2. Have you considered investing into alternate power sources such as solar panels and wind turbines to at least partially relieve the power distribution system?
    I am asking all this because using so much electricity clearly counts as largest (indirect) polution source. To produce electricity at that scale you burn a lot of coal, gas, or oil (producing tons of CO2), or even worse you use uranium in a nuclear power plant producing toxic waste our children will be bathing in in a couple of years.

  2. Steven says:

    Dave
    I am from China. Thanks a lot for sharing this with us . Everytime when I stare at Intel buildings I have the same feeling as you . ” But the building itself represents more than that “. Our passion and Intel culture . Cheers

  3. Mike B says:

    I think what Intel did with the money is fantastic. I think Green may be the next growth engine for the US economy. However, the globalization topic has so many variables it is brain numbing. Case in point, the US government actually helped with our latest Fab locations.
    From fabtech.org
    Intel Corp’s fab expansions paid for by President Bush
    Nov 02, 2005 at 11:52 PM
    The US President G.W Bush is indirectly responsible for the Intel’s impressive fab expansions and new fabs this year, according to a Reuters survey that covered the financial plans of the 30 companies that make up the Dow Jones industrial average. According to the survey only two companies have “clearly” stated what they will do with the billions of US dollars they have repatriated due to the one time tax incentive of the American Jobs Creation Act, President Bush got passed in October last year.
    Apparently, Intel has said that the $6.3 billion it repatriated will go towards the building and fitting out of the new 300mm fab Arizona (Fab32), and to expand the 200mm fabs in Colorado and Massachusetts and may be responsible for the Fab 11 X extension just announced!

  4. Dave Stangis says:

    Igor.
    Thanks for the comment and the questions. Actually, we have taken many steps to reduce power consumption in the fab and our suppliers have been great partners in reducing energy use in our production tools. You can find a lot of specific results in our corporate responsibility report – http://www.intel.com/go/responsibility.
    We continually look at alternative options for energy including renewables. When we consider other options, we not only look at cost and ROI, but also those options that fit well with local infrastructure.

  5. Nathan says:

    While it is true that Bush passed the bill that gave us that money, you need to consider this: By the time he passed that bill our fab was already preparing to tool up. October last year we had seeds already in training in Oregon getting ready for Fab 32. Sure it has only now been considered to be fully operational but it takes millions of man hours and testing hours to bring 180,000 sq. ft of fab with tools up to a production ready state.
    Yes we are using that check to fund those sites but you have to understand that they were already in the works or nearly complete by the time that Legislation was even passed.
    As you said there are a lot of components to the overseas movements. Yes Intel is investing in over seas ops but it has made firm commitments to growing here at home too.
    In Semiconductor manufacturing the cost of labor is a very small component of the financial picture. There is little to be gained from cheap labor as labor makes up less than 20% of the cost of manufacturing. This is a high ball number as I am sure that the actual labor cost is a lower percentage. Figure that a single foup of wafers at low market value and moderate yield will pay the annual salary of 70 fab workers and a high volume fab in full production will produce 200 such lots PER WEEK. Man power is cheap. its the tech we use to manufacture it that costs. Those costs are the same regardless of where in the world you are and in fact could be higher due to international shipping on equipment weighing in in the several ton per tool category with hundreds of tools in a full size fab.

  6. Nathan says:

    While it is true that Bush passed the bill that gave us that money, you need to consider this: By the time he passed that bill our fab was already preparing to tool up. October last year we had seeds already in training in Oregon getting ready for Fab 32. Sure it has only now been considered to be fully operational but it takes millions of man hours and testing hours to bring 180,000 sq. ft of fab with tools up to a production ready state.
    Yes we are using that check to fund those sites but you have to understand that they were already in the works or nearly complete by the time that Legislation was even passed.
    As you said there are a lot of components to the overseas movements. Yes Intel is investing in over seas ops but it has made firm commitments to growing here at home too.
    In Semiconductor manufacturing the cost of labor is a very small component of the financial picture. There is little to be gained from cheap labor as labor makes up less than 20% of the cost of manufacturing. This is a high ball number as I am sure that the actual labor cost is a lower percentage. Figure that a single foup of wafers at low market value and moderate yield will pay the annual salary of 70 fab workers and a high volume fab in full production will produce 200 such lots PER WEEK. Man power is cheap. its the tech we use to manufacture it that costs. Those costs are the same regardless of where in the world you are and in fact could be higher due to international shipping on equipment weighing in in the several ton per tool category with hundreds of tools in a full size fab.

  7. Bo says:

    A “15% reduction in global warming emissions” is an admirable achievement. Agree this is important and glad to see Intel steps in this direction. However I am a part of Intel that has little association with fab work, so I don’t have much context to know what this statement really means. What sort of emissions are normally generated by our fab plants, and in what magnitudes? What specific emissions were targeted for reduction when designing Fab32? How were those reductions achieved?
    Also agree with Igor’s statement about power usage, and it would seem Arizona is an ideal location to tap into solar power to augment our electricity needs…not just at fab plants but offices as well. Can you tell us anything about how you approached the energy supply question? Thanks!

  8. Compeng says:

    Regarding the comment on the fab being funded by Bush’s repatriation legislation… does that mean U.S. manufacturing competitiveness is based on subsidies, just like everywhere else in the world?
    If so, we’re on our way, but still way behind. :)

  9. Dave said:
    “We all still have a lot of work to do to keep the U.S. competitive in the globalization picture. But next time you read an article about high-tech moving off-shore – ask yourself – how many companies do you know that have invested $3 billion dollars in a single factory and more than $8 billion over the last couple years to develop state-of-the-art manufacturing capability and high-tech jobs in the U.S.?”

    And to think, if it wasn’t for the USA, Intel wouldn’t even exist and got to where it is today (exporting jobs internationally). Good luck with trying to keep-up “competitively”… you have to be twice as good (efficient) to get twice the pay as those in less-developed nations. Globalization… it will be interesting to see how this plays out going forward…

  10. Mark Klemkosky says:

    Hmmm… Ok, I will be the designated materialistic and capitalistic jerk. What does “green” cost the stockholders? (Please, spare me the tree hugging, granola crunching “good PR” rhetoric) If going green is saving Intel money, we should be touting this to our competitors to follow our role modeling lead. Ditto, if the cost is a wash or can be considered in the noise of rounding errors. If going green costs us money, boo-hoo, but we should let the stockholders know what being environmentally responsible costs. Costs like this should be a line item in our financial reporting statements (because I’m sure its there on our corporate tax returns). Any reason why there has not been focus on this topic? It is too taboo?

  11. vj says:

    Its a great and proud acheivement for Intel. Will Intel’s plants in China and Vietnam, Costa Rica will be this green? or better. Specially the Chinese one as it come online later. Or is it a case of moving pollution to other side of the world?

  12. Carlos says:

    Thanks Dave…one more “thing” about globalization…probably you know that pretty much all spares needed to ramp that fab where bought from Costa Rica…even more challenging if considering that…

  13. Isaac says:

    For those of us at fab 23 who are getting the axe soon, I can only persume that since labor cost is not the main driving principle, our jobs are going away because of “employees, infrastructure, security, logistics and a host of other features”.

  14. Bastiaan van der veer says:

    The western world (US, and western Europe even more so) has suffered an interesting problem in the last few decades. It has somehow become morally wrong to be self supportive and enjoy the fruits of life – and morally right to shoot yourself in the foot. After all, it is not fair that we don’t all have two feet.
    I grew up in the Netherlands and immigrated to the U.S. about 10 years ago. I am proud to work in and support an American company. I buy American products whenever I can – unless there is a real good reason not to (that reason is usually AVAILABILITY). To me this is common sense as this is the place where I live, and I share it with my neighbors.
    Yet I have been blown away by people argue with me when I do so. People who were born and raised here in the US and somehow are anti-American. Why??
    The US is a great country with great capabilities, but we suffer an auto-immune disease. If there is going to be such a thing as the demise of the US, it is not going to be from competition. It will be because we voluntarily give it up! It bugs me. I even made myself a bumper sticker saying “Hungry? Cold? No job? Eat your import car!”.
    I am glad to see Intel does its fair share to counter this trend, and also glad to see Mr. Bush support the effort. He sure lost popularity here in California – but I think people don’t want to see the good things he has done, only the bad things.
    Hey, life is great and I encourage every one of you to make the most of it! Life is fun!
    Cheers,
    Bas.

  15. FLOATINGGATE says:

    INTEL can reveal the future of the plant? »Online is still the 2006’s, the New Mexico FAB11, California D2 has been closed, the Colorado FAB23 is planning to sell the remaining 200 MM FAB, INTEL is intended to how the« ready to transform what For 300 MM? 200MM FAB can not be used after the 60 NM process.

  16. FRSU2121 says:

    Back to Igor’s question at the top of the comments list. As of January 2008, Intel is the single largest corporate purchaser of green power in the United States. Intel sits at #1 on the EPA’s Green Power Partners Top 25 list. There are many efficiencies built into each fab (I do work at Intel) but those specific features are miniscule compared to the strides made by being the single largest purchaser of green power in the U.S. and are dwarfed even further if you look at how much power Intel is saving in the world by the efficiencies created and reaped by the server farms of Google and the like with each new generation of our chips.