Intel Creates Jobs From Inside the Oval Office

Intel chief executive Brian Krzanich went to the White House Wednesday to announce that Intel will resume construction on Fab 42, the factory it began building in 2012 in Chandler, Ariz. Intel will be investing $7 billion in the fab, and will create 3,000 jobs, Krzanich said.

Fab 42 will create integrated circuits at the 7 nanometer (nm) node. This is Intel's first announcement of specific plans to move beyond the 10nm node, which it is in the process of ramping up now.

Getting to make the announcement at the White House was a public relations coup for Intel Corp. (Nasdaq: INTC). The company (along with some of its US high-tech peers) is signatory to a legal challenge to the Trump administration's proposed US travel ban on Muslim immigrants and refugees from seven Middle Eastern and African countries. The White House is ordinarily quick to rail against perceived antagonists (e.g., Carrier, Ford, Nordstrom, the White House press corps, haters, etc.), but has so far not remarked on Intel's involvement in that suit -- not even issuing a tweet.

That is perhaps because Trump ran his election campaign on creating jobs, and needs to be seen to be doing that. And perhaps because he needs to be associated with something unarguably positive after botching so many other things over his first three weeks on the job. Being able to make news about investment and new jobs from the Oval Office itself was a gift from Intel.

Fab 42 was originally planned to come on line at the 14nm process node. The company decided to build those 14nm lines alongside its 22nm lines at its facilities in Oregon. Intel suspended construction of Fab 42 in 2014, vowing it would someday finish the facility, the skeleton of which has been dormant since.

Krzanich told the White House press corps that Intel expects that in addition to the 3,000 people Intel would hire directly, the company estimates that 10,000 more jobs would be created in Arizona in support.

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Progressing from node to node has always been a horse race, and it still is. GlobalFoundries Inc. has signaled it will skip the 10nm node entirely, going from 14nm to 7nm in a leap. GlobalFoundries believes it might be able to start producing products on the 7nm line as early as the second half of 2018.

Once upon a time, each transition from one processing node to the next rendered a significant jump in performance for the finished products. Today, there's less certainty that one company's 7nm processing will render significantly better performance than another company's 10nm production lines. Nonetheless, there's that horse race.

Figuring out when Fab 42 will come online is still going to be reading tea leaves; Krzanich did not make any mention of when he expects Fab 42 to start operating, at least not at the White House, and not in the internal memo that Intel made public. Moore's Law suggests riding a node for about two years before jumping to the next one. Since Intel is only just now bringing up 10nm, it might be expected to bring up 7nm in 2019, maybe 2020 -- some have speculated it might even be later.

The administration's immigration ban is not just a side issue for US technology companies. Technology companies want to be able to hire the best and the brightest employees they can find anywhere in the world, and they don't want to see their ability to do so undermined in any way. This is why Intel joined the State of Washington's suit against the Administration's immigration ban. But of more importance to Intel will be policy on the H-1b visa program.

Tech companies in general want to expand the program; it is one of the specific policy goals the industry has for lobbying this Administration. Technology companies get their first crack at young talent during the years when people tend to be most productive. It might be incidental that young talent is cheaper.

Then again, it might not be incidental. US-born engineers and scientists have been complaining for decades that US tech companies misuse the H-1b program to replace older, higher-paid employees who are fully capable of doing the jobs that companies are giving to younger, less expensive employees -- who have to go home after a few years, in time for a new influx of cheap labor.

Either way, now the new President owes Intel one.

— Brian Santo, Senior Editor, Components, T&M, Light Reading

kq4ym 2/22/2017 | 8:11:33 AM
Re: A Long Wait It seems that the White House may become the next big marketing house and PR machine for those companies lucky enough to get an invite there. Intel's proposed 13,000 new Arizona jobs will certainly help the state, and Intel has not started the PR ball rolling with the D.C. visit of course.
mendyk 2/9/2017 | 5:38:11 PM
Re: A Long Wait So it sounds like this was something that was going to happen all along. I wonder why the theatrical flourish of a visit to the White House was involved.
inkstainedwretch 2/9/2017 | 3:43:46 PM
Re: A Long Wait Intel has traditionally situated roughly half its manufacturing in the US. It complains about its overall tax burden, but it plays states off each other very effectively to negotiate highly favorable state tax rates. 

For the most part, fabs demand a highly-skilled labor force, which would be relatively expensive no matter where the fab is, though I would imagine labor would still be cheaper overseas -- in those relatively few markets where the workforce has the skills required.

There's a national security component to siting fabs too. To compete effectively, the US must be more innovative than its rivals. Given that, how much of our most innovative technology do we want to site overseas?

Sure, kudos to Intel, but Intel isn't in this to be a pollyanna. Grove was a shark. Barrett was a shark. Kzranich is a shark. 

-- Brian Santo
danielcawrey 2/9/2017 | 3:18:20 PM
A Long Wait Kudos for Intel restarting this project. I didn't realize that the company is able to do so much manufacturing here in the US. I guess I just thought it would be cost prohibitive. I can't say I'd rather have the work go overseas given Intel is a well known American firm. 
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