Intel today announced plans to invest more than $5 billion to build a new chip manufacturing facility at its site in Chandler, Arizona, which will be focused on 14-nm process.

The announcement was made by Intel President and CEO Paul Otellini during a visit by President Barack Obama at an Intel facility in Hillsboro, Ore.

Intal said that the new Arizona factory, designated Fab 42, will be the most advanced, high-volume semiconductor manufacturing facility in the world. Construction of the new fab is expected to begin in the middle of this year and is expected to be completed in 2013.

"The investment positions our manufacturing network for future growth," said Brian Krzanich, senior vice president and general manager, Manufacturing and Supply Chain. "This fab will begin operations on a process that will allow us to create transistors with a minimum feature size of 14 nanometers. For Intel, manufacturing serves as the underpinning for our business and allows us to provide customers and consumers with leading-edge products in high volume. The unmatched scope and scale of our investments in manufacturing help Intel maintain industry leadership and drives innovation."

While more than three-fourths of Intel's sales come from outside of the United States, Intel manufactures three-fourths of its microprocessors in the United States. The addition of this new fab will increase the company?s American manufacturing capability significantly.

Building the new fab on the 14-nanometer process enables Intel to manufacture more powerful and efficient computer chips. The nanometer specification refers to the minimum dimensions of transistor technology. A nanometer is one-billionth of a meter or the size one ninety-thousandth the width of an average human hair.

Fab 42 will be built as a 300mm factory, which refers to the size of the wafers that contain the computer chips. The project will create thousands of construction and permanent manufacturing jobs at Intel?s Arizona site.

Previously, Intel announced plans to spend $6-8 billion over several years to upgrade several existing U.S. factories and build a new development fab in Oregon. These activities, announced in October, would support approximately 6,000-8,000 additional U.S. construction jobs during the building phase and eventually add up to 1,000 manufacturing jobs.

Taiwan Semiconductor Manufacturing Company is also ramping up the capacity of specific fabs. The company is currently equipping 12-inch tools at its Fab 14, Phase 4 facility located at the Southern Taiwan Science Park (STSP). Designed monthly capacity is 40,000 wafers, according to the company.

Apart from Fab 14, TSMC also runs the 8-inch Fab 6 at the STSP. The company indicated that combined capacity at the two STSP fabs accounted for about 40% of its overall capacity of 11.86 million 8-inch-equivalent wafers in 2010.

The other 12-inch fab, Fab 12 at the Hsinchu Science Park (HSP), northern Taiwan, is also undergoing expansion with new capacity expected to come online later in 2011.