Mark LaPedus EE Times (06/22/2009 11:18 AM EST)

For years, Intel has been one of the biggest buyers of capital equipment. In 2009, Intel's capital spending is expected to be slightly down from 2008. Last year, the company's capital spending was about $5 billion.

Earlier this year, Intel said it planned to spend $7 billion to build or expand its fabs in the United States over the next two years. Its investments will be made at existing fabs in Oregon, Arizona and New Mexico. It is not building any green field fabs; instead, the company will retool existing plants for its ramp at the 32-nm node.

Last year, Intel took the wraps off its new 32-nm process technology for high-performance microprocessors. The devices should be ramping up by year's end.

Working with Intel is a double-edged sword. Intel is both one of the best--and toughest--customers for the equipment industry. While Intel is a big fab tool spender, the company's stringent and proprietary requirements tend to drive vendors crazy. And for better or worse, it constantly pushes vendors to devise new and innovative tools that can enable the next-generation nodes.

Simply put, fab tool vendors have a love-hate relationship with Intel. On one hand, Intel is becoming among the select few that can afford to build costly fabs. On the other hand, Intel tends to buy equipment during a downturn, thereby seeking the best deal possible from vendors.

In contrast, rival Advanced Micro Devices Inc., which once touted that ''real men must have fabs,'' several years ago joined IBM Corp.'s technology alliance in an effort to share in the R&D costs and keep up with Intel on the process technology front.

In many respects, IBM's ''fab club'' failed to deliver for AMD. Unable to keep up in the R&D and capital spending race, AMD recently split the company into two, by spinning off its manufacturing operations into a new and independent foundry vendor. In effect, AMD has become fabless.

Intel is keeping a close eye on AMD. ''We believe being integrated has its advantages. It will be interesting how it unfolds with AMD as the design company,'' Intel's Mayberry said.

Many other large integrated device manufacturers (IDMs) have moved down the ''fab lite'' path and have formed various deals with the foundries. Many large IDMs have also shifted much of their R&D over to the foundries or formed alliances with collaborative groups, like IBM's ''fab club.''

On the other hand, Intel continues to do much of its work in-house, creating a strong bond with its tool and materials vendors. Over the years, however, Intel has refused to identify its fab tool vendors; the company keeps that information secretive and does not want to provide any help for its competitors.

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