Intel repeats Obama-era pledge to invest billions in a new factory

In a meeting with Trump, Intel's CEO again says the company will invest billions to make Fab 42 and create jobs

Intel's Fab 42

Intel CEO Brian Krzanich's meeting with new U.S. president Donald Trump was followed by a big announcement: The company will invest $7 billion over the next three to four years to complete a factory to make 7-nanometer chips.

The completion of Fab 42 -- where the chips will be made -- will create about 3,000 jobs in the Chandler, Ariz., area, Intel said. The chipmaker expects to help create 10,000 jobs tied to supporting the activities of Fab 42.

Trump has been pushing for more jobs in the U.S. and for bringing manufacturing back to the country. Making the announcement after meeting with Trump amplifies Intel's efforts to promote itself as a jobs creator.

But just last year, the company laid off more than 12,000 employees to restructure operations. Also, this isn't the first time Intel has committed to creating jobs and investing billions to make Fab 42. It made a similar announcement in 2011 but then backed off.

In February 2011, then-CEO Paul Otellini announced the company was investing $5 billion to complete Fab 42 to make 14-nm chips and create 4,000 jobs. That announcement was made during former President Barack Obama's visit to an Intel facility in Hillsboro, Ore.

Intel slammed the breaks on that plan in 2014 to keep the space available "for unspecified future technology."

The construction of Fab 42 began in 2011, but its completion was delayed, William Moss, an Intel spokesman, said in an email.

"We're making this investment now in anticipation of the growth of our business," Moss said.

In 2011, Intel announced the factory as it expected to grow its mobile device business. But Intel has now stopped making smartphone chips and is instead focusing on growth in the internet of things, server, automotive, and other markets.

The White House hailed the completion of the factory as a positive development.

Trump called the announcement a "great thing" for Arizona. "We're very happy, and I can tell you, the people of Arizona are very happy," he added.

Intel's announcement is the latest in a "wave of economic optimism" since Trump took office, Sean Spicer, White House press secretary, said later.

Outside the U.S., Intel also operates factories in China, Vietnam, Malaysia, Israel, and Ireland. Much of Intel's chip design takes place in Israel, and the company is making its latest Optane memory chips in Dalian, China.

Intel regularly establishes new factories to create smaller, powerful and more power-efficient chips. The 7-nm factory is a big investment and could lead toward longer battery life to smaller devices.

The 7-nm chips will be made for PCs, sensors, and other high-tech devices. The chips will "enable things like artificial intelligence, more advanced cars and transportation services, breakthroughs in medical research and treatment, and more," Krzanich said in an email to Intel's employees.

Two weeks ago, Intel said it was establishing a pilot 7-nm plant to manufacture test chips. Intel currently ships 14-nm PC, server, and IoT chips, and is expected to start shipping its first 10-nm PC chips code-named Cannonlake by the end of the year.

The announcement also gives a time frame for when Intel will make its first 7-nm chips. Intel will likely release three or more chip architectures on the 10-nm process, like it has with 14-nm, before switching over to 7-nm. The 7-nm could also introduce new tools like extreme ultraviolet, which will help make finer chips, and materials like gallium-nitride in chips.

Copyright © 2017 IDG Communications, Inc.

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