Intel to invest up to $1.5 billion on factory

SAN JOSE — Intel Corp. plans to spend $1 billion to $1.5 billion to overhaul its semiconductor production facility in New Mexico to manufacture computer chips with next-generation technology.

The Rio Rancho factory is expected to begin producing 45-nanometer chips -- meaning they will have features as tiny as 45-billionths of a meter -- in the second half of 2008, Intel said Monday. The transistors on such chips are so small that more than 30 million can fit onto the head of a pin.

Shrinking the circuitry of microprocessors, which act as the core calculating engines of computers, is essential to keeping up rapid gains in performance and energy efficiency.

Santa Clara, Calif.-based Intel expects the Rio Rancho investment to widen its lead over rival Advanced Micro Devices Inc. Both companies are transitioning from the 65-nanometer technology used for their most advanced chips.

Intel said it remained on track to begin production based on 45-nanometer technology in the second half of this year, and Sunnyvale, Calif.-based AMD has said it planned to introduce its own 45-nanometer products in mid-2008.

In addition to its plans for Rio Rancho, Intel is spending $3 billion on a factory in Arizona and $3.5 billion on a facility in Israel, both of which will handle the new technology.

Intel said last month that chips based on 45-nanometer technology would use new materials that promise to reduce energy loss and solve a major problem vexing the semiconductor industry.

The materials replace vital but problematic substances that had begun leaking too much electric current.