CPU 2482

Two months ago, we pointed out that Intel’s Fab 28, its new 45nm fab in Israel, was delayed.

Two months later, they still haven’t started production, and if if this article is any indicator, production won’t start for a couple months to come, with CPUs coming out at best a month after that, probably more like two.

Why is this happening? About a month ago, the Israeli press was reporting that Intel was in the market for a small power plant.

No, Intel didn’t build the fab, then said, “Oops, forgot the electricity.” Supposedly, the idea behind the power plant is to cut energy costs and reduce air pollution in the area.

Intel first refused to comment on this, then said they had “no plans to build a private power plant.”

While there’s some wiggle room in that comment (Intel doesn’t have an final plan from anybody yet, and they themselves wouldn’t build or run it), such a plant would take a minimum 6-8 months construction time after approval by all the relevant government authorities, so even if the story is basically true, it wouldn’t be available any time soon. It might just be that Intel didn’t like the deals it was offered.

So that’s probably not the reason for the delay (the plant was supposed to start shipping product around March), but if that’s not the reason, what is?

A clue ought to come from what happens with the other 45nm fab due to open this year, the one in Rio Rancho, New Mexico. Fab 11X is supposed to start shipping product in 4Q. If that gets delayed, then Intel has a general rather than local problem.

But even if this is just a local problem, what looks like a six month delay in getting a fab up and running is more of a problem than you might think at first.

This is because no fab opens up running full blast or anything near it. It normally takes more than a year for that to happen. So this delay means that instead of providing serious production in time for Christmas season, the Israeli fab won’t provide serious production until 2009. Rio Rancho can’t compensate, even if it’s finished on time, because it wasn’t meant to start seriously producing until 2009.

This means Intel is pretty much stuck with just one 45nm fab (along with the development fab at Hillsboro) for the rest of the year. Yes, some of the CPU shortages have been easing lately, but remember that the one full 45nm plant they do have has been ramping up (and still will for a quarter or two).

But Intel can’t make all (or even half) its processors from just one fab +. No doubt Hillsboro will be kept in production longer than expected, but that can’t help but delay 32nm development.

How does that impact you? Well, it explains why cheaper Nehalems won’t show up until well into 2009. We should also expect more mini-delays and longer part shortages/higher prices from Intel for quite some time to come, particularly for new products, for the rest of this year and well into next, and lack of fab capacity is going to be the major reason for it.

While it may be a stretch to say that this greatly helps AMD, these problems certainly will be a relief. Their upcoming 45nm products may not be any great shakes, but they’ll do relatively better if the entry price for Nehalems stays north, maybe well north of $300.


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