Intel Opens Irish Chip Plant

Days before Intel(INTC) releases its most significant processor upgrade in years, the company feted the opening of a new chip factory that will play a critical role in the company's comeback plan.

CEO Paul Otellini visited Leixlip, Ireland, on Thursday to commemorate the launch of one of Intel's most advanced fabrication facilities, capable of producing chips with 65-nanometer circuitry. The $2 billion fab is the first in Europe to produce 65-nanometer chips in high volume and the third in Intel's stable of 14 chip factories worldwide.

"Intel is establishing a clear technology lead with our next generation of dual-core processors based on the Intel Core microarchitecture," Otellini said in a statement. "Our manufacturing capability is key to fueling Intel's success."

Otellini also announced that Intel's manufacturing operations have officially "crossed over," producing the majority of the company's processors at 65 nanometers, rather than the older 90-nanometer circuitry.

The Santa Clara, Calif.-based chipmaker is set to launch a trio of new processors this summer, all of which will feature 65-nanometer circuitry. Woodcrest, the code name of the microprocessor designed for corporate servers, will lead the pack when it is released Monday.

With smaller circuitry, Intel can cram more transistors on each chip. This reduces the manufacturing costs and allows Intel to offer more functionality or computing horsepower on each chip.

Advanced Micro Devices(AMD), whose processors have been hailed as the performance and energy-efficiency leaders for the past year, is currently producing the majority of its chips with less-advanced 90-nanometer circuitry. The company says it expects to begin volume production of 65-nanometer chips in the fourth quarter.

Many expect Intel to use its manufacturing advantage to wage a price war with AMD and reverse some of its recent losses in market share. According to Mercury Research, Intel chips represented 74% of the overall market for x86 chips at the end of the first quarter, while AMD had 21% share.