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In Step With Intel; Rio Rancho Has Grown Along With Chipmaker

Posted on: Monday, 27 February 2006, 12:00 CST

By ANDREW WEBB Journal Staff Writer

Intel Corp.'s 25-year presence in Rio Rancho has gone from a blip on the radar to a brief stint as the company's most advanced chip plant.

In the rarefied world of computer-chip manufacturing, no records last for long, and Fab 11x, unveiled in 2002 as the company's most advanced, is a few years shy of out-ofdate status.

But the industry's ups and downs mean little here. For Rio Rancho, which was a subdivision of 10,000 in 1980 when Intel began building Fab 7 on a 180-acre patch of land along N.M. 528, the company is widely regarded as its

raison d'etre.

Jack Thomas, a Sandoval County commissioner who moved to Rio Rancho in 1977, likes to call Intel "the genie in the bottle."

"Once they came out, everything changed," he told the Journal in 2004 as the company began seeking a whopping $16 billion industrial revenue bond deal with Sandoval County.

Putting down roots

According to published reports, the then 12-year-old company chose to locate a chip plant in New Mexico because of its available labor and power, as well as a good dose of lobbying from Sandia National Laboratories executives.

Fab 7 was completed in 1981, but a recession caused Intel to hold off opening it until about 1983. Production began with 25 employees.

Today, Intel is the world's largest maker of computer chips, network processors and flash memory used in cellular handsets and other devices. Intel has more than a dozen fabs, or chip plants, around the world, and employs upward of 80,000 people. The firm had $38.8 billion in revenues in 2005, up from $34 billion the year before.

Side by side

As Intel grew here, its "company town" grew as well.

Within a few years, the chipmaker was building Fab 9, and later, Fab 11, which was completed in 1995. In 2000, Intel announced it would devote 29 percent of its annual capital expansion budget to a $2 billion expansion of Fab 11, called Fab 11x.

When completed in 2002, Fab 11 and Fab 11x together totaled more than a million square feet, and the plant is still the company's largest fab in terms of sheer size.

Since 1980, Rio Rancho's demographics shifted from mostly out-of- state retirees to young families seeking inexpensive, large homes and the new, high-paying jobs at the computer chip plant.

As Rio Rancho grew alongside it, Intel helped build a $30 million school, picked up part of the tab for the city's main thoroughfare and fueled its growth with thousands of high-paying jobs. It has also injected millions worth of time and equipment to surrounding community colleges to help develop semiconductor technology programs.

Not all roses

Intel's growth here hasn't come without detractors, however.

Critics have focused on tax breaks given to the firm and questioned whether a company that uses millions of gallons of water a day -- its average use last year was about 3.2 million gallons a day -- is appropriate for a desert setting.

Others, including some residents of Corrales, Intel's rural neighbor to the east, have repeatedly accused the company of air- quality violations.

A task force composed of state scientists and engineers, Intel representatives and politicians, using a $200,000 U.S. Environmental Protection Agency grant, finished a twoyear air quality study in June 2004, concluding that Intel emissions presented no danger. But some Environmental Department employees contended the tests were inconclusive, and local activists vowed to continue monitoring the air in Corrales.

Economic impact

Now in its 25th year here, Intel employs more than 5,300 and had an annual payroll of $302 million in 2004, making it the state's third largest commercial employer behind No. 1 Wal-Mart and No. 2 Presbyterian Healthcare, according to Department of Labor economist Mark Boyd.

In addition, between 3,000 and 4,000 contract employees handle everything from deliveries to information technology.

About 90 percent of the dollar value of the state's imports to other countries comes from computer chips manufactured by Intel, according to Larry Waldman, an economist with the University of New Mexico's

Bureau of Business and Economic Research. To date, Intel has invested about $10 billion in its local plants, said company spokesman Bill Calder, and Intel late last year announced plans to retool one of its local fabs at a cost of $650 million.

Race against time

When it was unveiled in 2002, Fab 11x was the company's most advanced. It made 300mm, or about 12-inch-wide silicon wafers, up from the standard 8-inch wafers. Furthermore, in industry parlance, it used 90-nanometer process technology -- a measurement that refers to the actual size of features on a chip, such as tiny switches.

Semiconductor International magazine called it a "Top Fab" in 2003 and Site Selection magazine chose the expansion as one of its top 10 economic development deals of 2000.

Campaigning for the $16 billion in IRBs in 2004, local officials said approval would help guarantee the company's continued investment here. Indeed, such investments could likely be in the offing. Intel officials are known for keeping mum on plant expansion plans, but company trends indicate the Rio Rancho plant is already on the trailing edge of Intel's technology.

Intel, and the rest of the industry, upgrades plants to respond to technology advances in a cycle that repeats itself about every 18 months.

By the end of 2006, four plants will be retooled to 65nm process technology -- meaning even more components on a chip. And, an Arizona plant is expected to be upgraded to even smaller 45nm process technology in 2007, senior vice president and manager of Intel's Technology and Manufacturing Group Robert Baker told a group of reporters and analysts in Oregon late last year.

By 2006, 50 percent of its business is expected to come from 65nm process technology. And, by 2007, the company is expected to stop tooling fabs for 90nm processes, Baker said.

The 90nm technology produced here still has about a two-year lifespan, as its use phases from chips for computers to chipsets in mobile devices, such as phones, Baker said.

Big impact

Intel's New Mexico plant directly employed 5,313 at the end of 2005, said local spokeswoman Natasha Martell. It had a payroll of $302 million and local spending of $132 million in 2004, the most recent figures available.

Source: Albuquerque Journal

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