Intel to invest $7 billion in U.S. facilities

WASHINGTON--Intel President and CEO Paul Otellini announced on Tuesday a $7 billion investment in U.S.-based manufacturing facilities, telling a crowd of Washington elites that the current economic recession gives the nation an opportunity to make once-in-a-lifetime changes and investments for the future.

"For nations like the United States, absolutely nothing about the future is inevitable or guaranteed--not jobs, not leadership, not our standard of living," Otellini told the Economic Club of Washington here. "How we deal with these changes can lead us to new heights--or they will define the beginning of a downward spiral."

It will take both public and private investments, Otellini said, for the United States to remain the world's leading innovator as well as retain its manufacturing economy.

"We need to focus on industries of the future," he said. "Ones in which we can command a competitive advantage."

For Intel, that means a $7 billion, two-year investment in existing factories in New Mexico, Arizona, and Oregon to manufacture silicon wafers with 32nm process technology. The investment is expected to support 7,000 high-wage jobs at those factories and support thousands of contract jobs for technicians and construction workers.

The investment is Intel's largest ever in a single process technology.

"As a global company, we have made a conscious decision to expand these factories here because we believe that investing in the future of American discovery isn't just the right thing to do," Otellini said, "it is an essential business decision if we want the United States to continue to be the engine of new ideas and technical leadership."

Intel CEO Paul Otellini spoke in front of the Economic Club of Washington on Tuesday.

(Credit: Stephanie Condon/ CNET News)

Making the investment during the recession puts Intel at a competitive advantage, he said. The company is at least two years ahead of the competition in this process technology, and his sense, Otellini said, is that the company will extend that lead with the investment announced Tuesday.

"This technology we're investing in right now is the most amazing thing I've seen in my three and a half decades at Intel," he said.

Intel's $15 billion in cash on hand makes the company less susceptible to the current credit crisis, Otellini said.

When the audience jokingly asked if Intel would consider its own Troubled Asset Relief Program, Otellini quipped that he didn't see anything "invest-able."

Even while acknowledging Intel's cash advantage, Otellini called for other companies to make investments that will help secure America's future as an economic and innovation leader.

"Make some investments, build out data centers," he said. "The memory industry and the hard drive industry need to make sure they don't stop innovating. At the end of it, new products is what sells."

However, the future of the technology industry will depend on more than private investment, Otellini said. He called the country's neglected education system the biggest threat to the industry.

"I do see the quality of graduate education improving in China," he said. "They're getting better and better every year. I'm not smart enough to know when there will be a crossover, but that day will happen."

"This technology we're investing in right now is the most amazing thing I've seen in my three and a half decades at Intel."

--Intel CEO Paul Otellini

The government, he said, has an opportunity through its current attempts at legislating economic recovery to make long-overdue investments in schools, health care, and other sectors.

Otellini told President Barack Obama last night that he supports the so-called "stimulus" plan in development.

"There are many elements I could get behind," Otellini said. "Health IT, broadband investments, funding for the NSF--those things I think are spectacular."

Obama called the CEO to congratulate him on Intel's investment, and "he reminded me he sees the Intel logo every morning when he opens his laptop," Otellini said.

Intel is also beginning a year-long initiative with the nonprofit Aspen Institute "to bring together some of the world's best minds in business, entrepreneurial circles, academia, the media, and government to lead a discussion on how technology investment can help grow the economy and create jobs," Otellini said.

More details of the initiative will be announced soon, he said.

[chuchucuhi]

Yay someone decided it would be good to invest while doing so is cheaper than it was.

[Mister Winky]

Moves like this are why AMD is going to be crippled for the foreseeable future. AMD is always going to have to play catch-up and they're always going to have to sell their products at lower prices that Intel even when their manufacturing process is more costly. Combine that with AMD's new, massively confusing naming scheme and their weak relationships with many major vendors (Apple = no, Dell = weak, low-end products) and I smell continued trouble for AMD.

-Mister Winky

[biffhenerson]

Corporations and individuals are starting to realize that now is the time to take advantage of low costs in the marketplace. This smart investment activity is all the stimulas we need. There was never a need for government bailouts. Let the recovery begin!

[TheOrginalNetguru]

It's about damn time. America created so many industries only to see those same industries leave because it is cheaper elswhere. American companies that benefited from hard working Americans only to move to cheaper climates need to leave all together. We need investment in the American worker now more than ever. Companies that are laying off millions of workers because of their shareholders profits also need to leave. We need Americans helping Americans, plain and simple. I applaud Intel for this awesome investment in the future of the world leader in so many idustries. WAY TO GO INTEL! Thanks for the confidence boost that we all need during these really scarey times.

[robbace]

If this is true I'll will be sure to choose Intel products in future purchases.

[robt.public]

Certainly every American will applaud this move, and of course it will help many to favor Intel's products. But this has nothing to do with AMD or or the technology competition between the two giants -- except that it may motivate AMD/ATI to follow Intel's lead and bring more manufcturing home. I certainly hope so!

[robt.public]

This is a global crisis -- however much lower costs may be in the US, they are lower still elsewhere. Intel has a choice, I think they made the right one.

[pjk0]

First of all, where did you get that horrific photograph of Otellini? VHS screen-capture?

As for the "investment": given the timing, I have a funny feeling Intel got some assurances of government money from the Obama economic stimulus plan, before making this announcement. And I suspect that is going to be a significant chunk of that $7 billion, directly or indirectly. Intel is clearly one of the most important strategic manufacturing assets in the USA. I cannot believe they won't get a piece of that pie.