Intel 2012 Annual Report Download - page 14

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Our products primarily compete based on performance, energy efficiency, integration, innovative design, features, price,
quality, reliability, brand recognition and availability. One of our important competitive advantages is the combination of
our network of manufacturing, assembly and test facilities with our global architecture design teams. This network enables
us to have more direct control over our processes, quality control, product cost, production timing, performance and
manufacturing yield. The increased cost of constructing new fabrication facilities supporting smaller transistor geometries
and larger wafers has led to a smaller pool of companies that can afford to build and equip leading-edge manufacturing
facilities. Most of our competitors rely on third-party foundries and subcontractors such as Taiwan Semiconductor
Manufacturing Company, Ltd. or GlobalFoundries Inc. for their manufacturing and assembly and test needs, creating,
among other risks, the potential for supply constraints and limited process technology differentiation between competitors
using the same foundry.
Manufacturing and Assembly and Test
As of December 29, 2012, 56% of our wafer fabrication, including microprocessors and chipsets, was conducted within
the U.S. at our facilities in New Mexico, Arizona, Oregon, and Massachusetts. The remaining 44% of our wafer fabrication
was conducted outside the U.S. at our facilities in Ireland, China, and Israel. Wafer fabrication conducted within and
outside the U.S. is impacted by the timing of a facility’s transition to a newer process technology, as well as a facility’s
capacity utilization.
As of December 29, 2012, we primarily manufactured our products in wafer fabrication facilities at the following locations:
Products
Wafer Size
Process Technology
Locations
Microprocessors ...........................................................................
300mm
22nm
Israel, Arizona, Oregon
Microprocessors ...........................................................................
300mm
32nm
New Mexico
Microprocessors ...........................................................................
300mm
45nm
New Mexico
Chipsets and microprocessors .....................................................
300mm
65nm
China, Arizona, Ireland
Other products and chipsets ........................................................
300mm
90nm
Ireland
Chipsets and microprocessors .....................................................
200mm
130nm
Massachusetts
As of December 29, 2012, most of our microprocessors were manufactured on 300mm wafers using our 22nm and 32nm
process technology. As we move to each succeeding generation of manufacturing process technology, we incur
significant start-up costs to prepare each factory for manufacturing. However, continuing to advance our process
technology provides benefits that we believe justify these costs. The benefits of moving to each succeeding generation of
manufacturing process technology can include using less space per transistor, reducing heat output from each transistor,
and increasing the number of integrated features on each chip. These advancements can result in microprocessors that
are higher performing, consume less power, and cost less to manufacture. In addition, with each shift to a new process
technology, we are able to produce more microprocessors per square foot of our wafer fabrication facilities. The costs to
develop our process technology are significantly less than adding capacity by building additional wafer fabrication facilities
using older process technology.
We use third-party manufacturing companies (foundries) to manufacture wafers for certain components, including
networking and communications products. In addition, we primarily use subcontractors to manufacture board-level
products and systems, and smartphones. We purchase certain communications networking products and mobile phone
components from external vendors primarily in the Asia-Pacific region.
Following the manufacturing process, the majority of our components are subject to assembly and test. We perform our
components assembly and test at facilities in Malaysia, China, Costa Rica, and Vietnam. To augment capacity, we use
subcontractors to perform assembly of certain products, primarily chipsets and networking and communications products.
In addition, we use subcontractors to perform assembly and test of our mobile phone components.
Our NAND flash memory products are manufactured by IMFT and Micron Technology, Inc. using 20nm, 25nm, or 34nm
process technology, and assembly and test of these products is performed by Micron and other external subcontractors.
For further information, see “Note 10: Equity Method and Cost Method Investments” in Part II, Item 8 of this Form 10-K.
Our employment practices are consistent with, and we expect our suppliers and subcontractors to abide by, local country
law. In addition, we impose a minimum employee age requirement as well as progressive Environmental, Health, and
Safety (EHS) requirements, regardless of local law.