Intel to Build New Chip Plant in Oregon, and Upgrade Others

The Intel Corporation said on Tuesday that it planned to invest $6 billion to $8 billion to upgrade manufacturing plants in the United States and build a new one in Oregon, adding as many as 1,000 new high-tech positions and thousands of construction jobs.
Intel, based in Santa Clara, Calif., has historically used its substantial cash reserves to invest in its manufacturing plants through economic downturns, advancing its technology while rivals struggled to stay afloat. It is a strategy that has been largely successful. Indeed, last week, the company reported better-than-expected earnings on a sharp increase in revenue.
“These investments will create capacity for innovation we haven’t yet imagined,” said Brian M. Krzanich, senior vice president and general manager of Intel’s manufacturing and supply chain.
A similar $7 billion investment by Intel about 20 months ago was focused on making chips using 32-nanometer process technology. Paul S. Otellini, Intel’s chief executive, vowed at that time to invest in chip factories in the United States rather than send the business abroad. He also urged other companies to follow Intel’s model of investing in future products despite the recession.
In recent months, Mr. Otellini has railed against incentives and other practices that make it far cheaper for companies to build and operate chip plants abroad. He has estimated it costs $1 billion less to operate a chip factory overseas than in the United States, not because of lower labor costs but because of incentives from foreign governments. Intel generates three-fourths of its revenue from overseas business, but three-fourths of its chip-making employees are in the United States.
Mr. Krzanich told reporters in a conference call that Intel benefited from the large manufacturing base in the United States despite the potential cost savings of manufacturing abroad. He called the plants a great asset “from a hardware standpoint,” but also because the employees were highly skilled. “We’re going to utilize that,” he said.
The upgraded plants will pave the way for higher-performing and sleeker electronic devices by allowing Intel to produce a new generation of 22-nanometer chips. The new Hillsboro, Ore., plant — Intel’s first new plant since 2007 — is scheduled to start production in 2013.