Intel saying goodbye to RP

INTEL could well be the most high-tech company to ever in-vest in the Philippines. Their main operations in the country are located at its manufacturing plant in General Trias, Cavite where they manufacture and test their microprocessors and flash memory.

Intel has been in the country since 1974, just six years after start-up with a manufacturing plant in Bangkal, Makati. In 1996, Intel opened their plant at the Gateway Business Park in Cavite, Thus, the news that Intel is putting up a new billion dollar plant in Vietnam is very bad news for our high-techies and the future of our electronics industry.

Here are the thoughts (much abridged) of someone (my sister Lory's husband Gregory Tangonan, Ph.D.) who understands these things: "One might be surprised or confused by Intel's seeming lack of commitment to stay in the Philippines. Making Pentium chips is actually a profitable business, these chips are so valuable Intel monitors closely their own employees lest the chips disappear somewhere in the process of fabrication, packaging and testing.

"So can we make some sense of why chipmakers might actually be looking at the Philippines as second-tier producer of high performance chips? Could there be a deeper reason for backing off from investing more money in the Philippines, in favor of spending a billion dollars in a new plant in Vietnam to fabricate Intel's chips?

"The fabrication process practiced worldwide has recently been displaced by a brand new process. In the search for greater performance, in accordance with Moore's Law, which states that the number of transistors that can be made inexpensively on a chip
doubles every two years, device physicists have found that the standard design has key failings, when the dimensions of the transistors are shrunk down to a few nanometers. The combination of a silicon dioxide insulator and the `conductive' poly-silicon gate become too leaky. When made with these small dimensions, the older design has high power leakage, way too high for portable
communication and computing devices require high processing power and low power in a small chip.

"To solve these problems, researchers from academe and the major electronic companies (NEC, Intel, IBM, TI, Fujitsu, Hitachi) developed metallic gates and high dielectric insulators that perform extremely well at these high circuit densities. The workhorse materials of poly-silicon gates and silicon dioxide insulators that make up the essential materials list of the process practiced today are now passé.

"Intel announced recently it has developed a 40 nm robust process, based on exotic materials like Hafnium metal and specialty oxides of heavy metals. This is the first major revamp of the circuit design in roughly 40 years. "The next generation of Pentium chips and for that
matter the next generation of most circuits will use this process, because Intel and IBM are busy making licensing deals for their new processes. Any new investment in chip fabrication facilities anywhere in the world will be based on this new technology. Given that this development has been in research for at least a decade and that major conferences have been dedicated to this topic, we should not be surprised that Intel is betting big on this new process.

"The new Hafnium process is a winner, and Intel is going to be the first to bring this new process to the market in the form of high performance Pentium chips. "The Philippines comes out the loser because we were unable to convince Intel to bring the new process here to the Philippines. From the standpoint of wanting to be number one among all competitors, Intel's move is understandably and highly predictable. We have no reason to be surprised.

"One can only wonder: What will be the response of the electronics industry, when they realize that their workhorse process is truly second rate? When will a tipping point be reached and companies like TI and Analog switch to this new process somewhere else?

"Can we find some investors or buyers willing to upgrade our `old facilities to the new Hafnium standard? Were our academic or industrial researchers unaware of this new approach, and should they not have warned the industry of this impending change? Why were the
Intel Philippines managers unable to make a technically convincing case to Intel America to bring the Hafnium process to the Philippines? How long can we sustain our present levels of exports if the very processes we practice today will become passé in the near future? Are we going to be content with testing and packaging making up the majority of our exports, as chip fabrication moves elsewhere? How do we focus our research and innovation in the electronics industry to make our Industry future proof?"

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From the wire story on the Intel move: "Intel could have selected any country to build its largest chip assembly and testing plant. But the world's biggest semiconductor company decided to make the $1 billion investment in a relative newcomer to the high-tech game – Vietnam. Intel announced last week it would more than triple its initial investment to expand the planned factory in southern Ho Chi Minh City from 150,000 square feet to 500,000 square feet. It is expected to begin operations in 2009 and could employ up to 4,000 workers. Vietnam's first emiconductor facility represents the country's biggest single foreign investment.

"And Intel officials say the decision ultimately came down to Vietnam's people. "The reasons we chose to invest here in Vietnam are evident," said Brian Krzanich, Intel's vice president and general manager for assembly and test, who announced the investment.

"'A very vibrant population, an increasingly strengthened education system, a strong workforce and a very forward-looking government.' Labor remains cheap in Vietnam, where education and self-improvement are rooted in the Confucian tradition and more than 60 percent of the population is younger than 30. Vietnam also has one of the world's fastest growing economies and was recently invited to join the World Trade Organization. The momentum continues to build as Hanoi hosts the Asia-Pacific Economic Cooperation summit, which will draw leaders from 21 Pacific Rim economies this weekend, including President George W. Bush. Hundreds of corporate leaders from around the globe also will attend a CEO summit.

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And, what is the news from the Philippines? Intel Technology Philippines Inc.'s senior management has been discussing its long-term options over the last few weeks. A statement from Intel states: "In an effort to keep employees informed, Intel has updated its employees that significant investments would be required to ensure the long-term viability of its factory building in Cavite.

Intel would like to reiterate that it has made no decision on this matter and is currently exploring multiple options."

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Source: http://www.malaya.com.ph/apr08/edducky.htm