Monday, October 18, 2021
Oct. 18, 2021

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New CEO says Intel will expand footprint in Oregon

Expansion of D1X factory in Hillsboro nears completion


HILLSBORO, Ore. — New Intel CEO Pat Gelsinger, visiting the company’s Hillsboro factories Wednesday, said the company isn’t done expanding in Oregon and expects to add to its local manufacturing footprint again within the next few years.

That’s the first time Intel has indicated that it plans to continue building in Oregon after it wraps up construction of a $3 billion expansion to its D1X research factory, which is nearing completion in Hillsboro.

Intel develops each new generation of microprocessor in its Oregon factories, then precisely duplicates its manufacturing process at sites in Arizona, Ireland and Israel.

“In another three or four years, I anticipate we’ll have another expansion here that we’ll then replicate across the manufacturing network,” Gelsinger said in an interview Wednesday with The Oregonian/OregonLive.

Before Gelsinger’s hiring in January, Intel had been contemplating outsourcing its advanced manufacturing, which would have diminished Oregon’s role as the heart of Intel’s research.

Now, with Gelsinger leading a global building boom for the company, Intel is going in the opposite direction — planning new factories around the globe. Gelsinger is also expanding into contract manufacturing, offering up Intel factories to build chips for other companies.

On Wednesday, Gelsinger said Oregon will get a share of that growth, eventually, and the new jobs and billions of dollars in investment that go along with it. Intel said it still has room to build in Hillsboro; planning documents submitted to the city in past years had shown no factory expansion beyond its current footprint.

“This is the hub of our semiconductor research,” Gelsinger said Wednesday. “It’ll always be that.”

In the four months since Intel announced Gelsinger’s hiring, he has embarked on an unprecedented spending spree to expand the company’s factory network after a string of technological failures. And he has campaigned aggressively for government incentives for the chip industry in Europe and the U.S. to reduce reliance on chip factories in Taiwan and South Korea.

“This is a critical industry for the nation, for the world, for every aspect of human existence. And you are now extraordinarily reliant on a few places in Asia,” Gelsinger said Wednesday. “Geopolitically, I say that’s not stable.”

Intel has announced this year that it plans to spend $20 billion to build two new Arizona factories and $3.5 billion to expand its chip packaging operation in New Mexico. It’s also confirmed plans to proceed with a $10 billion factory expansion in Israel.

Intel is racing to cash in on a global shortage of computer chips, which has constrained the supply of everything from PCs to smartphones to automobiles. It’s also striving to regain its technological edge after manufacturing defects delayed production of three consecutive generations of computer chip.

Though Intel’s headquarters are in Silicon Valley, its largest and most advanced operations are in Washington County. Intel is Oregon’s largest corporate employer, with close to 21,000 people working at its Washington County campuses.

The company said Wednesday that it has added 400 Oregon employees already this year and said more than 3,000 construction workers have worked on the third phase of D1X since construction began in 2019 at Intel’s Ronler Acres campus near Hillsboro Stadium.

Gelsinger met with Oregon Gov. Kate Brown and Hillsboro Mayor Steve Callaway and reviewed the progress of the third phase of D1X. He said COVID-19 delayed Intel’s construction timetable by a couple months but that the company expects the expanded portion of the factory will enter production early next year.

Wednesday’s visit to Oregon is the latest stop on a whirlwind world tour. In the past week Gelsinger has visited Belgium, Israel and appeared on “60 Minutes” to pitch the value of semiconductor manufacturing and drum up government support for the industry, and for his company.

Politico Europe reported last week that Gelsinger had asked for nearly $10 billion from European governments to help finance a new factory somewhere there, though Intel denied having requested a specific number.

In the U.S., Intel has joined an industry push for $50 billion in new direct support and a tax credit on money chipmakers spend on new production equipment. With the cost of a new factory now running above $10 billion, those tax credits could be worth billions of dollars to Intel over time.

In Oregon, Intel already enjoys some of the largest local tax breaks in the nation. Hillsboro and Washington County exempted the company from more than $120 million in property taxes on its equipment last year. Intel’s savings over the past decade were nearly $1.2 billion.

While Gelsinger didn’t pitch new Oregon incentives Wednesday, he did say that Brown and Callaway offered to assist in his campaign for federal support. (The governor’s office said they discussed “engagement with our congressional delegation” on promoting support for the chip industry.)

Intel has reported more than $20 billion in profits in each of the past three years and has generated so much cash that it took to buying back its own stock. Its gross profit margins are above 55 percent, among the most robust in any industry.

Now, Gelsinger is making the case that domestic chip manufacturing also needs federal support.

On “60 Minutes,” Gelsinger said Intel will severely curtail its stock buybacks. He said Wednesday that Intel can afford to grow without government incentives but insisted that it can do more if the U.S. matches the subsidies that other countries offer their chip sectors.