The New Mexico plant currently makes 90nm and should start producing 45nm chips by the second half of 2008.
Intel also said in a statement that it is on track to start 45-nanometer production at another facility in the second half of this year.
The factory to be renovated in Rio Rancho is known as Fab 11X and will be the fourth Intel plant to use 45-nanometer technology, which includes new materials that boost chip efficiency by cutting leakage of electrical current.