Intel is ramping up production of microprocessors at a reopened chip factory in Arizona using the world's most advanced mass production technology.

The company has already shipped dual-core microprocessors from the revamped facility, dubbed a 300mm (12-inch) plant due to the size of the silicon wafers used in the production process. Thousands of individual chips can be made on one wafer.

The Arizona plant, Fab 12, underwent a $US2 billion upgrade to the latest production techniques, which allowed smaller chips to be made on larger raw materials using 65-nanometer manufacturing technology on 300mm wafers, the company said. A nanometer is a measure of the size of transistors and other parts that are etched onto chips. The more transistors on a chip, and the closer they are together, the faster the chip can perform tasks.

The investment should pay off well for the company. Using the larger wafers and smaller etching tools enables chip makers to reduce costs by as much as a third compared to older factories that still use 200mm wafers. Technology companies have to continually innovate to find ways to cut costs, since users are accustomed to falling prices for gadgets as they mature, such as personal computers.

Intel, the world's largest chip maker by revenue, has only one other factory making chips with the same technology, an Oregon plant dubbed D1D. Most chip makers have not started using 65-nanometer technology for commercial production because it takes time to develop expertise in the technology. But a number of other companies have opened 300mm chip factories, including Samsung Electronics and Taiwan Semiconductor Manufacturing.

Intel shuttered Fab 12 eighteen months ago in order to make the upgrades, sending workers to other facilities around the US for work and training. The chip giant has already announced $US4.1 billion in semiconductor factory investments in the US this year, not including the Fab 12 upgrade, aimed at Arizona, Colorado, New Mexico and Massachusetts.

The combined investments would create 2000 new jobs at Intel and thousands of construction jobs, the company said.