Intel says factory to stay shut for now

SHARE URL EMAIL
FONT: A A A
Comments
The Republic | azcentral.com Tue Jan 14, 2014 12:00 AM

Intel has confirmed it is leaving vacant a massive new multibillion-dollar computer-chip factory in Chandler that President Barack Obama once touted as a symbol of the future of U.S. manufacturing.

No employees are working in the facility, known as Fab 42, which was completed late last year and was to bring 1,000 jobs and a $5.2 billion company investment.

Those jobs have been created, but employees are doing the work initially attributed to the new facility elsewhere on Intel’s Ocotillo Campus, Intel spokesman Chuck Mulloy said.

“It will be used for future technologies at a future date,” Mulloy said of the new building.

Which technologies and when it will become operational have not been determined, Mulloy said.

There are about 11,900 full-time employees at Intel’s two Chandler campuses. In 2011, when plans for the new fabrication facility were announced, there were about 9,700 full-time employees.

“It doesn’t matter which building they work in; we’ve already increased the workforce by more than 1,000 people at that work site,” Mulloy said.

Intel received about $3.3 million in state tax credits from the Arizona Commerce Authority for job creation, the organization reported. The company received credit for 348 jobs in 2011 and 743 jobs in 2012. This credit is available for companies that create at least 25 jobs and invest at least $5 million in capital.

The Fab 42 plant was touted as the most advanced high-volume semiconductor-manufacturing facility in the world. The massive structure was among the world’s largest construction projects in recent years, built with the world’s largest land-based crane, capable of pulling 4,000 tons, according to Intel.

Obama, who visited the construction site in January 2012, used it as the backdrop for a speech stressing the importance of expanding domestic manufacturing.

“I’m here because the factory that’s being built behind me is an example of an America that is within our reach,” Obama said. “An America that attracts the next generation of good manufacturing jobs. An America where we build stuff and make stuff and sell stuff all over the world.”

Intel’s newest technology, which is being developed in Oregon and is expected to be deployed in high volumes this year, will be built in an existing facility in Chandler rather than in the new building, Mulloy said.

By building the older 22-nanometer process and the new 14-nanometer process in the same facility, “we can more effectively and efficiently use the capital dollars in the existing facilities and double the use of the tools,” Mulloy said.

Shortly after plans for the new Chandler factory were announced in 2011, Intel executive Jason Bagley called the construction “an educated gamble.”

That is because Intel’s products have such a short life cycle, the company must develop new technology and the manufacturing processes to build it almost in parallel, said Bagley, Intel’s government-affairs manager.

“We have not invested the kind of money we did to have an asset not get used,” Bagley said. “That’s just not going to happen.”

Even if the building is not immediately opened, it is “an indication to the community that we have significant investment in place for future growth in Arizona,” Mulloy said.

About two-thirds of the cost of a new facility is typically spent on the tools inside, Mulloy said, so while he did not release a dollar amount of the new construction, it was likely closer to $1.7 billion.

“It’s a situation where Intel’s got more fab (factory) capacity than they need,” said Jim McGregor, principal analyst with Tirias Research, a high-tech industry research firm. “This has happened to them before in downturns in the economy, but it’s kind of unusual for it to happen in upturns.”

Intel often makes investments during downturns, said Steve Zylstra, president and CEO of the Arizona Technology Council.

“It’s been a hallmark of their success over most of their existence and I think this is just indicative of their strategy,” he said.

Chandler city officials said they were not concerned with the delay in opening the facility.

“As Intel Corporation is looking at future investment and where they go, now they have this facility that’s there which makes us even more competitive to draw the next technology from Intel into Chandler because they have this asset sitting there and waiting,” said Christine Mackay, Chandler’s economic-development director.

Operations at a $300 million research-and-development facility also completed in Chandler are expected to begin in the next six months, Intel spokeswoman Rachel Sutherland said.

► Join the Discussion

Posting a comment to our website allows you to join in on the conversation. Share your story and unique perspective with members of the azcentral.com community.

Comments posted via facebook:
► Join the Discussion

Join the conversation! To comment on azcentral.com, you must be logged into an active personal account on Facebook. You are responsible for your comments and abuse of this privilege will not be tolerated. We reserve the right, without warning or notification, to remove comments and block users judged to violate our Terms of Service and Rules of Engagement. Facebook comments FAQ

Back to Article
Comments posted via facebook:
az-chandler.azcentral.com/news/local/articles'; pagealias=pagealias.replace(/azcentral.com\//,''); pagealias=pagealias.replace(/\//g,':'); var ssts_vars=pagealias.split(':'); var utag_data={ ssts: pagealias, analytics: { prop17: ssts_vars[0], prop18: ssts_vars[1], prop19: ssts_vars[2], prop20: ssts_vars[3] } }; $(document).ready(function() { utag.view(utag_data); }); --> [an error occurred while processing this directive] [an error occurred while processing this directive]

We hope you have enjoyed your complimentary access.

Become a subscriber today to enjoy these benefits: