Intel’s new plant: Less bulk, more brains.

Intel broke ground on a new Semiconductor plant in Kyriat Gat today, the 4 Billion buck investment part of larger strategy that far eclipses the story headlined.

JPOST: US chipmaking giant Intel Corp. broke ground Tuesday on a new $4 billion plant in the southern Israeli city of Kiryat Gat.

The Israeli government contributed $525 million to the plant, which was to produce 45-nanometer semiconductor chips. Intel’s investment was the largest an industrial corporation has ever made in Israel.

Santa Clara, Calif.-based Intel set up its first development center outside the United States in the northern Israeli city of Haifa in 1974. It also has manufacturing, research and sales facilities in Jerusalem, and in central and northern Israel, employing a total of 5,400 people at six locations.

The new plant, scheduled to open in 2008, would upgrade Intel’s existing facility in Kiryat Gat and would create about 4,400 jobs, said Bob Baker, a senior vice president at Intel’s technology and manufacturing group.

What is missing from the current plant headlines is the much larger Intel Israel picture. A few years ago the Israeli Intel team came up with a newer more efficient type of chip design. It operated with less heat, used less juice, and was more capable than the regular Pentium 4 designs. Intel labelled it Centrino and it has been powering Intel Notebooks ever since with tremendous success.

Intel on the mat

During the same period as the Centrino’s roll out until now, Intel has been suffering a large string of high profile takedowns by rival AMD in the semiconductor area. AMD was first to develop 64bit computing that was compatible with today’s more familiar windows XP 32 bit environment.

AMD chips were also operating at lower speeds yet out processing Intel chips. Intel executives ducked for cover as AMD chips beat Intel out at higher speeds in the critical high end gamer area, and lastly saw AMD sprint towards dual core processors, putting two chips in one slicing costs across the board for those needing more computing with less. Just as embarrassing, Microsoft chose the AMD64 standard as their own implementation for Windows, forcing Intel to copy AMD nearly indentically to get their own chips 64 bit Windows ready – ouch!

In each example Intel has strived to play a form of catch-up, the caveat being the less than stellar Pentium 4 architecture. The Pentium 4 is a behemoth, big lumbering and strong but not very intelligent as compared to his processor friends. As a result Intel chips had been running way too hot, and scaling (getting them to run ever faster) has been problematic. Worse, it seemed supercharging a behemoth at higher and higher frequencies seemed only to deliver negligible speed results, while AMD’s architecture scaled rather effortlessly.

AMD managed to snag some rapidly moving numbers like a 25% computer semiconductor share across desktops and more troubling, big inroads in the server market as well, where piping hot monstrous processors racked one on top of the other endlessly are not cool..

Back to the drawing board

As it became clear to senior Intel people that they had a serious problem and subsequently some less than impressive quarters, they went to a backup plan. Redesign the brains of the Pentium 4, and subsequently the very core of the chips themselves. They turned to the Centrino way of doing things developed in Israel, and have been earnestly implementing the plan of canning the old way of design and increasing the P4 chips’ IQ across the board, Israeli style since.

As such this plant isn’t so much about Intel investing in Israel, as it is Intel investing in Intel, and fixing some serious strategy miscues on the part of the Semiconductor giant these past 3 or so years. As of now for the time being, a new ‘Intel inside’ may very well be an ‘Israel inside’.

The new Israeli designed cores that will be powering Intel chips going forward are codenamed: Yonah & Merom.

Yonah is a dual core mobile specific chip released in January, an impressive little wonder which will be powering the notebook segment. While Merom is the brand new bigger brained Intel 64 bit core, also designed in Israel. It will be the baseline core / chip for Intel desktop variants going forward, and may be a painful counter to AMD come mid 2006.

The next time someone asks you to boycott Israel, ask them if they want you to dump your PC too.

[tags]Israel, Intel, Technology[/tags]