Intel Corp. Announces $7 Billion Investment in Arizona Plant – WSJ

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 that Intel is seeking growth as its personal computer business matures. Those new areas include 5th generation or 5G networks and 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 and 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 the administration’s 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.

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