Intel plans 1,000 high-tech jobs in 2 states

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- Intel announced Tuesday that is investing up to $8 billion in microchip manufacturing plants that could create up to 1,000 permanent high-tech jobs in Arizona and Oregon.

Intel said it will spend between $6 billion and $8 billion to fund a new development fabrication plants in Oregon and to upgrade four existing plants in Oregon and Arizona. The plants will manufacture "next-generation" 22-nanometer microprocessors, or chips, the company said.

The company said this will support the creation of 800 to 1,000 permanent high-tech jobs as well as 6,000 to 8,000 construction jobs.

Intel also said the investment will allow it "to maintain its current manufacturing employment at these U.S. sites."

Intel spokeswoman Lisa Malloy said the new plant will be built in Hillsboro, Ore., near Portland, where the company already has a significant presence. Of the four plants slated for upgrade, two are in Hillsboro and two are in the greater Phoenix area.

Malloy said this is the first factory built by Intel since 2007, when it completed construction on a plant in Arizona. She said that the Arizona plant is one of the factories slated for upgrade to produce smaller chips.

Intel, based in Santa Clara, Calif., said it generates three quarters of its revenue from overseas markets, but employs three quarters of its chip-making employees in the United States.

"It does cost a bit more to build one of these factories from scratch in the U.S.," Intel chief executive Paul Otellini told CNN's Ali Velshi in a live interview.

But he said labor costs are not the main problem -- grants from foreign countries are the biggest incentives for U.S. companies to build factories overseas. He said the U.S. government should offer more incentives to build plants in America.

"Right now, I see the U.S. out of the worst in terms of the recession," he said. "I see slow growth for the next year or two. [But] I see a regulatory environment that is still very difficult to build factories, to get permits."

Ashok Kumar, technology analyst for Rodman & Renshaw, agreed that this is a serious impediment to high-tech manufacturing in the U.S.

"If you put a factory in a place like China, you're likely to get a significant tax holiday, and probably the land and bricks at close to gratis," he said. "So that puts the U.S. at a significant disadvantage as being the domicile of choice for high tech manufacturing."

Kumar said the U.S. government should provide more incentives for U.S. manufacturing "to make the playing field level."

Intel's (INTC, Fortune 500) stock was down slightly, but it still outperformed the Nasdaq composite index, which fell about 1%To top of page

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