Intel’s Multi-Billion-Dollar Cost of Doing Business

Intel's planned development fab.

Intel's planned development fab.

Intel’s patriotic investment in American manufacturing news blast worked so well last year that the company apparently decided to make a fairly big to-do today over its planned capital expenditures again, showcasing its $6 billion to $8 billion in planned investments in manufacturing for the next 18 months or so. The news is great and includes a new development factory in Oregon, but it’s also not really game-changing news. Intel regularly makes investments in its fabs, and because fabs are such hugely complicated manufacturing plants churning out billions of expensive and precision-made chips, those capital expenditures aren’t cheap.

I’ve discussed how it takes a lot of money to keep making chips smaller and more powerful, with most fabs costing about $5-6 billion to build. Once built, some of the equipment inside is revamped every 18 months or so as part of making chips ever smaller. So sure, let’s cheer that Intel still has fabs in the U.S. and is keeping them moving down the process node cramming more and more transistors on a chip (Moore and Moore perhaps?), but let’s not kid ourselves that this is some big hoopla-worthy event. For Intel, it’s the cost of doing business.

Frankly, given the number of chips it needs to sell in order to support all those wafers churned out at new manufacturing nodes, and its competition against ARM, Intel’s investments in its fabs may end up hurting it. Here’s Intel CEO Paul Otellini talking to Fox Business News on the announcement:

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