Intel to invest $7 billion in 7-nm Arizona fab

Feb. 9, 2017

Intel Corp. yesterday announced plans to invest more than $7 billion to complete Fab 42, which the company expects to be the most advanced semiconductor factory in the world. The high-volume factory in Chandler, AZ, is targeted to use the 7-nm manufacturing process. It will produce microprocessors to power data centers and smart and connected devices worldwide. The announcement was made by U.S. President Donald Trump and Intel CEO Brian Krzanich at the White House.

John D. McKinnon, Ted Greenwald, and Rebecca Ballhaus at The Wall Street Journal report that the facility will make chips for 5G, drone, and other applications. They quote a White House official as saying, “This will impact a wide spectrum of industries from automotive to health care.” Intel last year announced a strategy to transform from a PC company to one “…that powers the cloud and billions of smart, connected computing devices.” The restructuring was expected to result in a reduction of up to 12,000 positions globally.

The completion of Fab 42 in three to four years will directly create approximately 3,000 high-tech, high-wage Intel jobs for process engineers, equipment technicians, and facilities-support engineers and technicians who will work at the site, the company said. The Journal quotes Stacy Smith, Intel’s executive vice president in charge of manufacturing, operations, and sales, as saying the addition of 3,000 jobs in Arizona is “consistent” with Intel’s restructuring strategy.

Combined with the indirect impact on businesses that will help support the factory’s operations, Fab 42 is expected to create more than 10,000 total long-term jobs in Arizona.

Intel had largely completed Fab 42 by 2013 but announced in 2014 that it would be leaving the facility vacant. An Intel spokesman said at the time with regard to the building, “It will be used for future technologies at a future date.” That date has apparently arrived.

The Journal quotes Krzanich as saying, “We’ve been working on this facility for several years. 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.”

Vindu Goel in The New York Times reports that 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,” Goel writes, adding that the companies may support the administration’s tax and regulation policies yet oppose its immigration policies. Intel was one of nearly 130 companies opposing President Trump’s January 27 executive order restricting immigration from seven predominantly Muslim nations, and Krzanich criticized the executive order on Twitter.

Context for the investment was outlined in an e-mail from Intel’s CEO to employees:

“Intel’s business continues to grow and investment in manufacturing capacity and R&D ensures that the pace of Moore’s law continues to march on, fueling technology innovations the world loves and depends on,” said Krzanich. “This factory will help the U.S. maintain its position as the global leader in the semiconductor industry.”

He added, “Intel is a global manufacturing and technology company, yet we think of ourselves as a leading American innovation enterprise. America has a unique combination of talent, a vibrant business environment, and access to global markets, which has enabled U.S. companies like Intel to foster economic growth and innovation. Our factories support jobs—high-wage, high-tech manufacturing jobs that are the economic engines of the states where they are located.”

Intel says it is America’s largest high-technology capital expenditure investor ($5.1 billion in the U.S. 2015) and its third largest investor in global R&D ($12.1 billion in 2015).* The majority of Intel’s manufacturing and R&D is in the United States. As a result, Intel employs more than 50,000 people in the United States, while directly supporting almost half a million other U.S. jobs across a range of industries, including semiconductor tooling, software, logistics, channels, OEMs and other manufacturers that incorporate our products into theirs.

The chips made on the 7-nm process will power sophisticated computers, data centers, sensors, and other high-tech devices, and enable things like artificial intelligence, more advanced cars and transportation services, breakthroughs in medical research and treatment, and more, the company said. These are areas that depend upon having the highest amount of computing power, access to the fastest networks, the most data storage, the smallest chip sizes, and other benefits that come from advancing Moore’s Law.

*PWC Global Innovation 1000 study and Intel 2015 annual report.

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