How exactly can Intel afford to drop $7 billion upgrading its U.S. factories over the next two years when the economy is in the dumps and few in the tech industry seem to be making a profit? Maybe a better question is how can Intel afford not to keep investing?
The news of the massive investment was made public today by Intel CEO Paul Otellini, who was giving a speech in Washington. But what's perhaps most interesting about the $7 billion figure over two years is that rival chip maker AMD has lost almost as much over the past two years, and has split into separate design and manufacturing firms. Two different companies with two very different approaches; who's will pay off in the long run?
Despite what has been the worst PC market in a long time, Intel says its $7 billion investment is the most it has ever spent transitioning to new manufacturing technology. Part of the money will go towards new machinery at factories in Oregon, Arizona, and New Mexico, all of which will be capable of producing 32nm wafers.
"From our perspective this is a cheaper, better technology," Otellini said. "Spending this money will lower our costs and give us more competitive products. It's something that's fundamental to our business model."
And fundamentally different than AMD's approach. Maybe there's a lesson to be learned here.
