The plant helps make its owners, Intel Corp. and Micron Technology Inc., leaders in the memory chip market, but IM Flash also is illustrative of how challenging it can be for the state to keep pace with worldly rivals when it comes to attracting companies willing to make huge investments here.

First, consider this anecdote. It was February 2007 and a winter storm blew into the state, at one point even closing State Road 92 that runs to the IM Flash plant. For a group of workers from Singapore, it was their first experience driving in such conditions.

"I won't tell you how many little car accidents, fender benders, they had trying to drive on snow and ice," said Dave Baglee, the co-CEO of IM Flash.

But the slip-sliding employees weren't here permanently. They were actually at IM Flash to train for jobs at a planned Intel-Micron plant in Singapore, which was chosen for the new facility because it was able to offer incentives that made it more attractive than other sites in the United States and other places in the world.

Thus, the IM Flash plant in Lehi now operating at full capacity with around 1,600 employees demonstrates that although Utah can be a global player, its place in that realm is tenuous.

'Amazing deal': To be sure, IM Flash's success is about as good as it gets when it comes to putting Utah on the global stage. Three years ago, Intel and Micron pledged more than $5 billion to complete the giant, 2.3 million-square-foot plant. Its work force, including 473 engineers, earns on average about twice that of Utah County wages. In addition, about 50 related companies from inside and outside the United States have located near the plant.

"It's an amazing deal for the state to have a company like this with a capital investment like that," said Jason Perry, executive director of the Governor's Office of Economic Development, which estimates that the plant provides $122 million in new state revenues.

IM Flash produces the latest version of NAND flash memory chips, which store digital information such as photos, music and text in various devices in a market that keeps expanding.

"I consider us the leading edge right now in technology, ahead of the competition," said Baglee, who shares the CEO post at the Lehi plant with Rodney Morgan. Baglee oversees operations for Intel, the Santa Clara, Calif.-based manufacturer of computer hardware products, and Morgan for Micron, the Boise, Idaho-based memory-chip maker.

In 2005, Micron and Intel announced they had formed the joint venture to produce flash memory chips at the Lehi plant, which Micron began building in 1995, only to mothball a large portion of it in 1996 when the bottom dropped out of the computer chip market.

In committing to finish building the plant and turning it into a NAND flash memory producer, Micron and Intel wanted to be in the thick of the rapidly growing market for devices such as iPods, digital cameras, memory sticks and a host of other products.

But making flash memory production profitable is a difficult proposition. The manufacture of big round, 12-inch wafers on which circuits are imprinted requires a huge initial expenditure, as much as $5 billion for a new plant. Then advances in the technology every year and a half or so bring on a new generation of chips that require hundreds of millions of dollars in additional capital to begin producing the latest thing.

More memory: Jim Handy, an analyst who tracks the microprocessing industry for Objective Analysis, said that the relentless drive to print more memory on each chip is how the major players in the industry try to stay ahead of the competition. Each new-generation chip drives down the cost of manufacturing by allowing more and more memory to be placed in the same-sized surface.

"You have to devote enormous energy to staying ahead of the competition or you just get left in the dust," said Handy.

IM Flash sits on top of the technology end of NAND flash memory market, not because of its market share that rests at about 12 percent, but because it is producing chips with more memory for their size than the competition.

"They have a process technology that is just head and shoulders above everybody else," said Handy.

The other major players are Samsung of South Korea, Toshiba of Japan, Hynix Semiconductor Inc. of South Korea and SanDisk of California, with Samsung the market-share leader with about 40 percent.

Because most of the cost of manufacturing NAND chips is tied up in capital investment, which doesn't vary much depending on where a factory is located, the Utah IM Flash facility is able to compete successfully on a global scale, said Handy.

"It ends up over 80 percent or possibly more like 90 or 95 percent of the cost of manufacturing a wafer is capital," he said. "It doesn't matter what country you go to, the capital depreciation is going to be about the same."

Incentives, incentives: And that brings us back to the Singaporeans trying to drive on snowy Utah roads.

To try to capture that future growth, Intel and Micron conducted a worldwide search for a location for a new plant that would have as much as 30 percent more capacity than the Lehi facility.

Microchip plants are huge consumers of energy and water, so the availability of those resources lead a list of infrastructure needs that also includes the ability to purchase supplies of gases and chemicals used in manufacturing.

But Baglee cited the "ease of doing business" as the first factor in deciding where to locate a plant, as well as the availability of a "quality work force." Into that mix, the companies consider government subsidies that help ease the burden of enormous capital expenses.

Utah has the infrastructure, and Baglee praises the quality of IM Flash's Utah work force, the cost of which is not a large consideration in plant siting.

"It really came down to tax incentives," Baglee recently told a gathering of business leaders about the decision to locate the new plant in Singapore. "The state of Utah has been very generous to us, but if you look at the grants out there, you've got to go where you can make the lowest-cost product."

He also cited Singapore's willingness to provide visas to skilled foreign workers from other countries such as India and China. Perry, of the Utah Governor's Office, notes that the U.S. federal government's refusal to grant enough work visas to engineers and other highly skilled and educated workers from other countries can be a problem for companies in Utah and elsewhere in the United States.

Perry added that IM Flash never came to the state looking for additional incentives. And Baglee said Micron also already had two plants in Singapore, a relationship that was a factor in locating the new IM Flash plant there.

Although IM Flash is a high-profile economic engine for Utah, it is a player in highly volatile industry. Micron reported a $1.8 billion loss in its 2008 fiscal year that ended in August. In announcing the loss, Micron said that the average sales price of its NAND flash memory products was down 85 percent, compared with 2006, all of which led Micron and Intel last month to suspend operations aimed at opening the Singapore plant.

So far in 2008, the Lehi plant has received $2 million in incentives as part of a package that is to extend for five years. But Perry said despite incentives offered by others - such as a recent $1.2 billion New York offer to AMD to locate a chip plant there - Utah is competitive in attracting companies. Recruiters point to the state's comparatively low utility rates and an educated work force capable of speaking a number of languages.

"Those are things you can't buy out there," Perry said. "We have not needed to be the highest bidder."

tharvey@sltrib.com