“The things that are not conducive to investments here are [corporate] taxes and capital equipment credits,” he said. “A new semiconductor factory at world scale built from scratch is about $4.5 billion  in the United States. If I build that factory in almost any other country in the world, where they have significant incentive programs, I could save $1 billion,” because of all the tax breaks these governments throw in. Not surprisingly, the last factory Intel built from scratch was in China. “That comes online in October,” he said. “And it wasn’t because the labor costs are lower. Yeah, the construction costs were a little bit lower, but the cost of operating when you look at it after tax was substantially lower and you have local market access.”

Image Thomas L. Friedman Credit... Fred R. Conrad/The New York Times

These local incentives matter because smart, skilled labor is everywhere now. Intel can thrive today  not just survive, but thrive  and never hire another American. Asked if his company was being held back by weak science and math education in America’s K-12 schools, Otellini explained:

“As a citizen, I hate it. As a global employer, I have the luxury of hiring the best engineers anywhere on earth. If I can’t get them out of M.I.T., I’ll get them out of Tsing Hua”  Beijing’s M.I.T.

It gets worse. Otellini noted that a 2009 study done by the Information Technology and Innovation Foundation and cited recently in Democracy Journal “ranked the U.S. sixth among the top 40 industrialized nations in innovative competitiveness  not great, but not bad. Yet that same study also measured what they call ‘the rate of change in innovation capacity’ over the last decade  in effect, how much countries were doing to make themselves more innovative for the future. The study relied on 16 different metrics of human capital  I.T. infrastructure, economic performance and so on. On this scale, the U.S. ranked dead last out of the same 40 nations. ... When you take a hard look at the things that make any country competitive. ... we are slipping.”

If the government just boosted the research and development tax credit by 5 percent and lowered corporate taxes, argued Otellini, and we “started one or two more projects in companies around the country that made them more productive and more competitive, the government’s tax revenues are going to grow.” With the generous research and development tax credits and lower corporate taxes they receive, Intel’s chief competitors in South Korea basically have “zero cost of money,” said Otellini. Intel can compete against that with superior technology, but many other U.S. firms can’t.