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Intel, in Show of Support for Trump, Announces Factory in Arizona

February 09, 2017

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SAN FRANCISCO — Intel, the world’s largest computer chip manufacturer, will invest $7 billion to finish a factory in Arizona, adding 3,000 jobs, the company’s chief executive said on Wednesday after meeting with President Trump at the White House.

[| February 8, 2017 |The New York Times]

The completion of the factory, which will complement two other Intel semiconductor plants in Chandler, Ariz., had been under consideration for several years.

Standing beside Mr. Trump in the Oval Office, Brian Krzanich, Intel’s chief executive, said the company had decided to proceed now because of “the tax and regulatory policies we see the administration pushing forward.”

Mr. Trump said: “The people of Arizona will be very happy. It’s a lot of jobs.”

He said Intel called the White House several weeks ago to coordinate the announcement. That outreach illustrates the tightrope that Silicon Valley companies are walking as they deal with a president most of them did not want to see in office.

Intel was one of nearly 130 companies that signed a legal brief challenging Mr. Trump’s Jan. 27 executive order temporarily blocking the entry of all refugees and of immigrants from seven predominantly Muslim nations. Earlier, Mr. Krzanich criticized the order on Twitter, declaring, “As a company co-founded by an immigrant, we support lawful immigration.” (Intel’s third employee and longtime chief executive, Andrew S. Grove, survived the Holocaust and arrived in the United States after fleeing the Soviet invasion of his native Hungary in 1956.)

Yet Intel, like Apple and other large technology companies, also supports the Trump administration’s plans to reduce corporate taxes and regulations. During the presidential campaign, Mr. Krzanich planned and then canceled a fund-raiser for Mr. Trump.

Stacy J. Smith, the executive vice president who oversees manufacturing and sales, said Intel considered itself apolitical. “Intel engages, whatever the administration,” he said in an interview after Wednesday’s announcement. “We focus on the issues that we care about.”

Intel said it agreed with Mr. Trump’s desire to improve the investment climate for American manufacturers. “In places where we believe the policies are in the best interest of the company, we lean in,” Mr. Smith said.

In other areas, such as Mr. Trump’s desire to curb immigration and end free-trade agreements, Intel disagrees, and it is telling the White House so. “We care about hiring the best and brightest people around the world,” Mr. Smith said. “We care about exporting our products all over the world.”

Mr. Krzanich said in a message to employees that he had chosen to announce the expansion at the White House to signal his support for the administration’s efforts to make American manufacturing more competitive.

“When we disagree, we don’t walk away,” he wrote. “We believe that we must be part of the conversation to voice our views on key issues such as immigration, H1B visas and other policies that are essential to innovation.”

Intel’s strategy of engagement mirrors that of Elon Musk, the chief executive of Tesla Motors and SpaceX, who serves on a presidential advisory council. Other Silicon Valley leaders, such as Travis Kalanick of Uber, have distanced themselves from the administration under pressure from employees and customers.

Intel’s political action committee gave about equally to Democratic and Republican candidates during the last election cycle. Individual employees donated far more to Hillary Clinton’s campaign than to Mr. Trump’s. But over all, the company is not a major political donor.

New chip plants are tremendously expensive, requiring large tracts of land, reliable electricity and water, and a skilled work force that includes people with doctorates in chemistry and technicians who can repair a malfunctioning robot. Sophisticated equipment is necessary to deposit and etch microscopic layers of material on silicon wafers, which are then cut and packaged into the microprocessors that run personal computers, servers, smartphones and, increasingly, other electronic devices.

Countries compete to land such plants, especially modern factories that produce the most valuable chips and bring high-paying research and development jobs. Government subsidies are common, with China vowing to spend tens of billions of dollars to expand its domestic chip industry.

While most technology manufacturing, such as computers and smartphones, has moved overseas, American factories still account for about one-seventh of global chip production and produce many of the most valuable computer chips, including Intel’s flagship processors. Seventy-six chip plants are scattered across the United States, from South Portland, Me., to Newport Beach, Calif., according to the Semiconductor Industry Association.

The industry is seeking corporate tax cuts and incentives for research and development. In addition, chip makers would like to see the United States government relax longstanding national security restrictions on the export of new chip technology. In Intel’s case, the regulations forbid the company from making its high-end processors in China.

Mr. Smith said Mr. Trump had offered Intel no financial incentives to complete the Arizona factory.

The plant was conceived in 2011. President Barack Obama visited the site in 2012, when construction had just begun, and he praised the plant as an example of “an America where we build stuff and make stuff and sell stuff all over the world.”

But it was mothballed in 2014 after sales of personal computers — and the Intel chips that go into them — started to slide. Intel restructured its business and announced last year that it was laying off 12,000 people, including 560 in Chandler. The company now employs about 50,000 people in the United States and 106,000 worldwide.

As Intel looks beyond servers and personal computers to new markets like other Internet-connected devices, cars and tablets, sales are growing again, and it will need the new factory when it is completed in a couple of years. “We’re building it for our own business reasons,” Mr. Smith said.

The plant will build ultradense chips that Intel refers to as seven nanometer, with transistors packed more closely together than in the chips the company now builds. The tighter spacing allows for faster, more energy-efficient chips. “This factory will produce the most powerful computer chips on the planet,” Mr. Krzanich said.

Intel, one of the original chip companies, from which Silicon Valley gets its name, is based in Santa Clara, Calif. But most of its chip production is in Oregon and Arizona. It also has factories in China, Ireland and Israel.


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