Intel to invest $5 billion in new factory for Chandler - Ahwatukee Foothills News: Valley And State

Intel to invest $5 billion in new factory for Chandler

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Posted: Friday, February 18, 2011 1:52 pm | Updated: 11:30 am, Mon Aug 1, 2011.

Intel picked Chandler for a $5 billion plant that it touts as the most advanced and highest-volume computer chip factory on the globe.

The plant will employ 1,000 permanently and thousands more during construction. Chandler Mayor Jay Tibshraeny said it might qualify as the largest construction project in the world at the time, as well as a huge boost to a state battered by the recession.

"It's good for the entire state because a rising tide lifts all boats and this is a rising tide - a $5 billion rising tide," he said.

Intel is already Chandler's biggest employer with about 1,000 high-wage jobs. Each Intel position creates three to four other jobs in the Valley, Tibshraeny said.

Intel CEO Paul Otellini announced the Chandler factory during a visit by President Barack Obama at an Intel plant in Hillsboro, Ore. The Arizona investment comes after a 2010 announcement that Intel would invest $4-6 billion to upgrade its Chandler and Oregon facilities. Chandler officials said Intel emphasized the latest investment will be on top of what was already pledged.

Intel chose Chandler because of the quality of schools and universities, as well as its experience in the city, said John Pemberton, manager of the facility. While Intel supports a package of tax cuts that Gov. Jan Brewer signed into law Friday, Pemberton said existing economic incentives - and not any new action by the state - led to the company picking Chandler.

"We have had phenomenal results with our operations here in Arizona," Pemberton said. The Chandler plant will produce semiconductors with conductors the size of 14 nanometers. A nanometer is one-billionth the size of a meter or 90-thousandths the size of a human hair. That level of miniaturization allows for more efficient and powerful computers. Intel officials said the Arizona-made chips will be used in computer servers, handheld devices and likely in products that haven't been conceived yet.

About three-fourths of Intel's chips are shipped outside the U.S., but about three-fourths of the chips are made on U.S. soil.

Construction should start later this year and the plant is slated to open in the last half of 2013. The 1 million-square foot facility is dubbed Fab 42 and will be the fourth chip-making facility on a square mile of land that Intel owns. Chandler has approved master plans that include a fifth plant, but Tibshraeny said the company has enough property to expand for decades.

"They will not run out of land in Chandler at that site," he said.

Intel has made chips in Chandler for three decades. While the property is in a foreign trade zone that greatly reduces its property tax rate, the plant's $5 billion value will generate new revenue for the city and local schools. However, Tibshraeny said the city hadn't yet calculated that amount or how much it would get from construction sales taxes.

Economist Dennis Hoffman, director of the L. William Seidman Research Institute at ASU's W.P. Carey School of Business, said Intel's new plant will have a huge fiscal impact on many levels.

The addition of 1,000 highly skilled, highly compensated workers at the new plant gives a boost to the East Valley "that is woefully in need of an injection of this magnitude," he said.

The repercussions of all these jobs mean more money flowing into the economy, from housing to grocery stores. There will be a need for thousands of more workers in auto malls, clothing shops, restaurants and more. Small businesses could pop up to fill consumer demand, he said.

"For economists, we get giddy when we see things like this," he said.

Placing the new factory in Arizona makes sense, Hoffman said, because of the existing semiconductor manufacturing business here. Plus there are research universities, "focused on the manufacturing procedures and capabilities at these plants. We produce people ready and willing to work in these plants."

"There are key efficiencies here on behalf of Intel," he said.

Tibshraeny, who left the Legislature after eight years, said he didn't believe any new economic policies at the state level helped lure Intel. He attributed the decision to Intel's success here, the educational system and quality of life. The decision shows Arizona is poised to grow economically, he said, adding he thinks Arizona's bad publicity recently hasn't done the kind of harm that some have feared.

Intel began talking with Chandler about the factory only in the last two weeks. Tibshraeny said Intel informed him at 1:45 p.m. Friday that Chandler was selected. That came just minutes after Intel's CEO made the announcement with Obama in Oregon.

"We got scooped by the president, but I guess that happens," Tibshraeny said.

Tribune writer Michelle Reese contributed to this report.

 

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