New Intel chip factory placed on hold as sales slump

New facility will instead focus on "future" tech

Hit by slumping personal computer sales, hardware giant Intel has put off opening a major chip factory.

The "Fab 42" facility built in Chandler, Arizona, will remain closed for the foreseeable future while other facilities at the same site will be upgraded. Intel's decision not to open the chip plant was first reported on Tuesday.

"The new construction is going to be left vacant for now and it will be targeted at future technologies," Mulloy told Reuters.

Despite not opening the new factory, or fab, Intel has exceeded a target to hire over 1 000 employees since construction started in 2011, Mulloy said. Intel received state tax benefits for hiring those people.

Barack Obama, while campaigning for re-election in 2012, made a stop at the factory's construction site, where he called for government incentives to attract manufacturing lost to Asia in recent years back to the US.

Larger chips, lower costs

Intel is the world's top chip maker but it has been caught off guard by the success of smartphone and tablets, a revolution in computing that has eaten into the usual demand for PCs. Global PC shipment took a dive in 2013, the worst year for the platform since Gartner began tracking it.

It is currently expanding a plant in Oregon where engineers will work on a long-term plan to manufacture microchips on silicon wafers measuring 450mm. The largest currently used in the chip industry measure 300mm across.

Plans by Intel and big rivals like Samsung Electronics to eventually expand to 450mm will allow them to save manufacturing costs by squeezing more chips on each production line. Intel, which on Thursday is due to report is fourth-quarter earnings, said in November it expects its revenue to be flat in 2014 compared to last year.