Intel plans to invest $650 million in the company's existing manufacturing site in New Mexico. The investment will be used to increase the capacity of the 300mm wafer fabrication facilities in Rio Rancho, N.M., called Fab 11X.

"Today's announcement signals another important addition to one of Intel's pre-eminent U.S. manufacturing sites, and better positions us to meet customer requirements," said Intel President and CEO Paul Otellini. "Additional 300mm wafer manufacturing capability helps improve the overall cost-effectiveness of our worldwide manufacturing network. Investing in an existing manufacturing site allows us to take advantage of our highly skilled workforce in New Mexico."

Construction and new tool installations are scheduled to continue through 2006, with production operations set to begin through the new expansion in early 2007.

This investment is part of Intel's strategic goal to increase manufacturing on 300mm wafers that use 90nm, 65nm and future process technologies. Intel has several fabs manufacturing with 300mm wafers today. These facilities are Fab 11X in New Mexico, D1D and D1C in Oregon and Fab 24 in Ireland.

Manufacturing with 300mm wafers (about 12 inches in diameter) increases the ability to produce semiconductors at a lower cost compared with more widely used 200mm (eight-inch) wafers. The total silicon surface area of a 300mm wafer is 225 percent, or more than twice that of a 200mm wafer, and the number of printed die (individual computer chips) is increased to 240 percent. The bigger wafers lower the production cost per chip while diminishing overall use of resources.

The announcement comes a just couple of weeks after the establishment of AMD's new 300 millimeter Fab 36 facility in Dresden, Germany.