From Site Selection magazine, May 2001
COVER STORY (continued)

Rio Rancho:
Betting Big on New Chips

On May 24, 2000, Intel made an announcement that -- for most companies -- would be shocking. Intel, the world's largest maker of computer chips, announced that it would commit 29 percent of its entire year's capital expansion budget to a single project: the $2 billion wafer fab expansion at the company's site in Rio Rancho.
        The company said it would add more than 1 million sq. ft. (92,900 sq. m.) to its existing facility, including 135,000 sq. ft. (12,542 sq. m.) of cleanroom space for the manufacturing of microprocessor products. The expansion will incorporate Intel's new 0.13 micron process technology and will make microprocessors on 300-mm (12-inch) wafers.
        Construction began almost immediately. Completion is targeted for late 2001. Full production capacity at what will be the world's largest cleanroom manufacturing site (435,000 sq. ft./40,412 sq. m.) is projected for 2002.
        "The expansion is reflective of our commitment to invest in manufacturing capacity to help us meet the growing future demand for our products," Mike Splinter, Intel senior vice president and general manager of the Technology Manufacturing Group, said. "This additional manufacturing capacity will help us maintain our leadership in the extremely competitive world of semiconductors."
        The 300-mm wafer offers 225 percent of the silicon surface area and about 240 percent of the printed die (individual computer chips) per wafer, compared to the standard 200-mm (8-inch) wafer used in many semiconductor manufacturing plants today. In addition, the larger wafers will reduce manufacturing costs per wafer by more than 30 percent.
        "We expect to begin production using Intel's 0.13-micron process technology with copper metallization in 2002 with production of 300-mm wafers," Splinter said. A micron is about one-one hundredth the width of a typical human hair.
        The Rio Rancho site produces flash memory chips and the full range of microprocessors, including the Intel® Celeron and the Intel® Pentium® III Xeon processor.
        Upon completion, the project is expected to create up to 1,000 new jobs within five years. These include technicians, engineers and support personnel -- jobs that, while not exactly scarce in the Albuquerque area, pay much better than the average New Mexico wage.
        The average annual wage at the Intel plant in Rio Rancho is $46,000, nearly double the average state wage of $25,000. The starting salary at Intel is $36,000, but company spokesman Terry McDermott says that most employees make a lot more than that simply by working overtime and weekend shifts.
        It's not as difficult to get a job at Intel as one might expect. For entry-level positions at the fab plant, Intel requires a 2-year associate's degree in high-tech manufacturing. For students at the nearby University of New Mexico in Albuquerque and area community colleges, jobs at Intel provide a solid paycheck.
        The company's economic impact on the Greater Albuquerque area is staggering. Intel's annual payroll is more than $230 million, and that's just for full-time employees. The company also does business at any given time with some 5,600 contract workers, most of them suppliers and consultants who help Intel keep its extremely expensive equipment running properly.
        Some 600 construction workers were on site building the new fab in January. By mid-summer, the ranks of construction workers at the 24-hour-a-day building project will swell to 2,400. The company is responsible for 75 percent to 80 percent of all products exported from New Mexico. Since 1990, Intel has invested more than $4.5 billion into its Rio Rancho operations, including $783 million to New Mexico-based suppliers over the past five years.
        Over the past six years, Intel has paid $136 million in corporate income taxes to the state government, making the company New Mexico's largest taxpayer.
        To New Mexico's state government leaders, Intel is one prized catch they don't want to lose. "People forget that Bill Gates first incorporated in New Mexico, but there was not a warm reception for him here," says John Garcia, secretary for the New Mexico Economic Development Dept. "Polaroid also started here and left. The political dynamic in New Mexico had been a horrible situation for years. Our whole approach now is to commercialize innovation. Somebody's idea is going into a product."
        Under the leadership of Gov. Gary Johnson, New Mexico has become much more aggressive in industry recruitment and retention.
        "We are positioning New Mexico to be the next great place to do business," says Garcia. "We must keep the talent in New Mexico."
        Putting its money where its mouth is, the government is incentivizing the Intel project in Rio Rancho. At the forefront of the deal package is a $2 billion industrial revenue bond from Sandoval County, which Intel will use to construct the wafer fab plant and then pay back over 20 years.
        But that's only one reason why Intel chose Rio Rancho.

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