By John D. McKinnon, Ted Greenwald and Rebecca Ballhaus
WASHINGTON -- President Donald Trump and Intel Corp. Chief
Executive Brian Krzanich on Wednesday announced plans for a $7
billion investment in a major manufacturing facility in
Arizona.
The announcement was the latest in a series of events by Mr.
Trump touting his job-creation efforts, and gave the president an
opportunity to reframe his relationship with the high-tech sector
after a round of criticism from Silicon Valley over his recent
immigration order.
A White House official described the planned Intel facility as
"the most advanced semiconductor facility in the world." It will
provide 3,000 high-skill manufacturing jobs, officials said.
Some chips that will be made there will be used in emerging
technologies where Intel is seeking growth as its personal-computer
business matures. Those new areas include 5th generation or 5G
networks as well as drones.
"This will impact a wide spectrum of industries from automotive
to health care," the White House official said.
The plant is expected to be producing chips within three to four
years that will take advantage of a next-generation manufacturing
recipe that will etch even tinier transistors on a chip than
Intel's latest process, which is due to be reach the market later
this year, the company said.
At his Oval Office meeting with Mr. Trump, Mr. Krzanich said
Intel was encouraged by administration policies that will make the
U.S. a more attractive place to do business.
"We've been working on this facility for several years," he
said. "We actually held off on doing this investment until
now...It's really in support of tax and regulatory policies that we
see the administration pushing forward that really make it
advantageous to do manufacturing in the U.S."
Mr. Trump and his aides often say they are focused on reducing
the cost of doing business in the U.S. by easing regulatory and
other burdens.
Mr. Trump called the investment "a great thing for Arizona.
"We're very happy and I can tell you the people of Arizona are
very happy," he said. "It's a lot of jobs."
"We've been in the planning phase for this factory for quite a
while. We've been watching it -- when do we have to start it -- I'd
say, for at least a year, and we're now to the point where we're
going to have to start this year doing some of the facility work,"
said Stacy Smith, Intel's executive vice president in charge of
manufacturing, operations and sales.
Intel's new plans involve opening a manufacturing plant at an
existing facility in the Phoenix area. The factory, known as Fab
42, was largely completed several years ago but never put in
service, executives said. That facility drew praise from
then-President Barack Obama in 2012 for its potential to bring more
manufacturing jobs to the U.S. But the company announced in 2014
the plant wouldn't be opening after all amid changing market
conditions.
Since then, Intel had already started increasing its overall
investment again. The Santa Clara, Calif., company said in January
its capital spending jumped more than 31% to $9.6 billion last
year, and it plans to increase that again to around $12 billion
this year, as it shifts to producing more advance chips.
Wednesday's announcement is the latest in a series of events by
Mr. Trump aimed at highlighting his administration's efforts to
boost job creation, particularly in manufacturing. Mr. Krzanich
recently was named a member of Mr. Trump's manufacturing jobs
initiative.
The event also offered an opportunity for the president to try
to improve relations with the high tech industry, after the
criticism he received from numerous Silicon Valley companies over
his recent executive order on immigration.
"I think this shows the kind of partnership the president
envisions having with major companies and startups alike that
populate places like Silicon Valley," the White House official
said.
Intel already does much of its advanced wafer fabrication -- the
process of etching microscopic circuits onto the silicon wafers
that are turned into computer chips -- in the U.S., although it
also has built such plants in Ireland, Israel and China.
Wednesday's announcement gave Intel officials a chance to highlight
the company's still-substantial U.S. manufacturing presence, and
its plans for future growth.
"Intel is very proud of the fact that a majority of our
manufacturing is here in the U.S., and the majority of our research
and development is here in the U.S., while over 80% of what we sell
is sold outside of the U.S.," Mr. Krzanich said. Asked whether
Intel would bring back jobs from overseas, he said the investment
"is actually about expansion, this is about growth."
Intel announced in April 2016 a plan to cut 12,000 jobs,
amounting to 11% of its workforce, part of a restructuring plan to
cut costs and free up capital to invest in building markets that
promise faster growth than its traditional strongholds in PCs and
servers. The restructuring generated a $2.3 billion charge the
company expects to pay off by mid-2017.
The addition of 3,000 high-wage, high-skill jobs to Intel's
workforce is "consistent" with the company's restructuring plan
announced in April 2016, said Mr. Smith.
In addition to the 3,000 jobs, the revived Fab 42 is likely to
generate an estimated 7,000 further jobs to support the plant, Mr.
Smith said. Those support positions include technicians who aren't
employed by Intel but work on-site to help keep the equipment
running at top performance, as well as security and other site
functions. Those jobs would phase in as construction is completed
and the facility begins producing chips in three to four years, Mr.
Smith said.
He estimated that construction would employ 3,000 people over
the next three to four years to complete the facility and install
the necessary manufacturing equipment.
Write to John D. McKinnon at john.mckinnon@wsj.com, Ted
Greenwald at Ted.Greenwald@wsj.com and Rebecca Ballhaus at
Rebecca.Ballhaus@wsj.com
(END) Dow Jones Newswires
February 08, 2017 16:06 ET (21:06 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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