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Intel plans to build 2 Arizona factories, expand chipmaking

by JONATHAN J. COOPER THE ASSOCIATED PRESS | March 25, 2021 at 2:04 a.m.
Intel’s newest factory, Fab 42, became fully operational in 2020 on the company’s Ocotillo campus in Chandler, Ariz. This month, Intel announced a $20 billion investment to build out two new factories there. (AP/Intel Corp.)

CHANDLER, Ariz. -- Intel announced that it will build two new factories in Arizona and outsource more of its production as a new chief executive officer looks to turn around the struggling chipmaker.

The California-based company said Tuesday that the Arizona expansion will cost about $20 billion and create 3,000 permanent jobs as Intel builds a foundry business to provide chips for other firms. More construction in the United States, Europe and elsewhere could be announced over the next year, CEO Pat Gelsinger said in a video outlining his vision for the company's transformation.

"The unprecedented demand for technology has created even more need for the innovative products Intel creates," Keyvan Esfarjani, Intel's senior vice president of manufacturing and operations, told reporters outside the company's plant in Chandler, Ariz.

Intel dominated chipmaking for decades but has stumbled lately with delays in its development of a next-generation process already in use by a major Asian supplier, Taiwan Semiconductor Manufacturing Co.

Intel has struggled to adapt to the shift from personal computers to mobile devices since Apple released its game-changing iPhone more than a decade ago. Although Intel has remained profitable, its heyday during the PC era was long ago.

Intel weathered another blow last year when Apple, also based in California, announced it would rely on its own chips to power its Mac computers instead of Intel's.

Arizona Gov. Doug Ducey called Intel's growth plan the largest private-sector investment in state history and a victory for U.S. manufacturing.

"Let's bring semiconductor manufacturing back to the United States," Ducey said. "And while we're at it, let's bring it back to Arizona."

Taiwan Semiconductor is also planning a large factory in north Phoenix.

Intel has a history of making splashy announcements that don't immediately pan out. A decade ago, the company announced plans to build a new multibillion-dollar factory in Chandler while then-President Barack Obama visited Intel's plant in Hillsboro, Ore. That facility, known as Fab 42, was put on ice for years, was announced again during the Trump administration in 2017 and finally opened late last year.

The company, which earned nearly $21 billion last year on revenue of $78 billion, is eligible for up to $90 million in state tax credits if it fulfills the job and investment commitments it made Tuesday, said Sandra Watson, head of the Arizona Commerce Authority, the state's economic development agency.

State lawmakers on Monday rushed through legislation to increase the funding available for the program from $70 million to $125 million a year, which Ducey signed into law hours before Intel's announcement.

Intel began operations in Arizona in 1980, when it established a facility in Chandler. It later expanded to a second campus several miles away in the sprawling suburb's Ocotillo region.

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