Intel is preparing for a massive buildup in Oregon, according to multiple people familiar with the conversations, potentially spending billions to build and equip a factory for its next generation of computer chips.

People with direct knowledge of the plans say Intel hopes to begin construction by the end of June. It would add an enormous, third section to the cutting-edge Hillsboro research factory known as D1X and add yet another project to Oregon’s already overloaded construction sector.

Intel announced expansion plans last month but few specifics. People in Oregon’s construction industry say the company is lining up contractors and labor for the massive project, and some say Intel has told them it is committed to going forward.

Others say Intel has hedged a bit in its conversations, indicating its plans depend at least to some degree on the global economic outlook.

D1X is already home to Intel’s most advanced research and it’s where the company crafts each new generation of chip technology. Its expansion would represent a deeper commitment to Oregon as well as a billion-dollar stimulus for the state.

“Having that big anchor company locally, where they do their highest and most productive (research)…is hugely beneficial for our region,” said Josh Lehner with the Oregon Office of Economic Analysis.

Construction industry insiders say Intel has spoken openly about its D1X plans and expect the project to last at least 18 months, followed by several months of equipment installation. Sources inside Intel’s manufacturing operation also have been told to prepare for a major Oregon project this year.

Those people asked not to be identified speaking about a major client or employer. Hillsboro says its city planners have not yet received any applications for the project, but the city said it makes its permitting requirements clear and can expedite requests and plan reviews.

Though Intel declined comment, a third phase to D1X has been part of the chipmaker’s long-range plans for at least four years. Last month, Intel announced it would expand in Oregon, Ireland and Israel amid constraints in its production capacity.

Intel announced those plans even though it has been without a chief executive since June. CEO Brian Krzanich quit after the company uncovered "a past consensual relationship with an Intel employee" in violation of corporate policy.

It would be unusual for a company to make a multibillion-dollar commitment without a CEO to affirm the decision, but Intel could announce a new chief as soon as Thursday, when it announces 2018 financial results.

And the timing makes sense in other ways.

Intel is preparing to adopt manufacturing technology called extreme ultraviolet lithography, or EUV. The new production tools — $120 million apiece and each the size of a bus — enable smaller features on computer chips.

Intel will need new factories for its 7-nanometer class of computer chips, its first generation to be made with EUV technology, and D1X was designed with that in mind.

The 7nm chips are due sometime in the next few years – once Intel overcomes technical barriers that have repeatedly delayed the rollout of 10nm chips.

Dan Hutcheson, a longtime chip industry watcher and chief executive of VLSI Research, said Intel’s Oregon plans don’t surprise him. In semiconductors, he said, technical advancement requires significant investment.

“They keep breaking these barriers,” Hutcheson said. “Part of that is just making the billion-dollar bets on the future.”

Intel’s D1X factory What: Intel’s main research factory, or fab, in chip industry parlance. D1X is where the company develops each new generation of microprocessor and begins manufacturing it. The company duplicates the production process invented in Oregon at factories in Arizona, Ireland and Israel. Where: The company’s Ronler Acres campus near Hillsboro Stadium. Scale: The existing factory is 2.2 million square feet, in two adjoining sections. That’s equivalent to 15 Costco warehouses. When Intel built the second phase of D1X, it also built a seven-story office building adjacent to the fab, a manufacturing support building and a five-story parking garage. What’s new: Intel is planning a third fab, roughly the same size as each of the first two phases, or 1.1. million square feet. Taxes: Intel pays regular property taxes on its land and buildings but has a tax deal that exempts the most valuable part of its factories, the equipment, from local taxes. That saved Intel $193 million last year alone. Those savings will go up substantially if Intel builds the third phase of D1X.

Intel built D1X in two phases starting in 2010, spending billions of dollars on a humongous project that helped Oregon’s construction industry recover in the aftermath of the housing sector’s collapse during the Great Recession.

The existing factory encompasses 2.2 million square feet of production space, equivalent to 15 Costco warehouse stores. The factory, at Intel’s Ronler Acres campus near Hillsboro Stadium, includes several additional support buildings and a major office.

Details of the new project aren’t clear, but past planning documents indicate it is roughly the size of the first two phases, 1.1. million square feet apiece.

Though Intel’s headquarters are in Silicon Valley, the company’s largest and most advanced operations are in Oregon. It is the state’s largest corporate employer, with 20,000 working at its campuses in Washington County. And they’re some of the best-paid jobs in the state: the average wage in Oregon’s chip industry is $143,000, compared with $52,000 across all industries.

Intel made Oregon its main research and manufacturing site in the 1990s, after a series of changes in state tax policy. The changes had the effect of drastically reducing Intel’s state income tax while enabling some of the nation’s largest tax breaks.

Those incentives exempt most of its equipment from the property taxes other businesses pay. Washington County says those savings were worth $193 million to the company in the last fiscal year alone. Intel’s current tax deal runs for up to three decades and would apply to the pending D1X expansion.

A new factory wouldn’t necessarily mean a lot more jobs, though.

Semiconductor manufacturing is largely automated, and Intel’s Oregon employment has grown by just 24 percent since Intel began building D1X in 2010. The company’s revenues have increased by more than 60 percent during that period.

Still, if construction starts this summer it could be well timed given the cooling state and national economies.

“That would be a boost to the regional economy that a lot of other parts of the country aren’t going to have,” said Lehner, with the state Office of Economic Analysis.

Intel’s new factory would be one of several big construction projects under way in Oregon. The list includes data centers for Google, Apple and Facebook, the new Multnomah County Courthouse in downtown Portland, and a billion-dollar upgrade at Portland International Airport.

The flurry of activity has strained Oregon’s construction industry, but contractors and labor suppliers agree they can handle Intel’s project – though it may add time and cost.

“The challenge is that the labor shortage has to be factored into project schedules and it really takes a lot of preplanning and creativity,” said Dan Drinkward with Hoffman Construction, the Portland firm that served as general contractor for the first two phases of D1X.

Though Drinkward would not discuss Intel specifically, he said that the industry has grown adept at coping with growing demands for skilled tradespeople.

“The challenge is that the labor shortage has to be factored into project schedules and it really takes a lot of preplanning and creativity,” Drinkward said.

Big projects tend to resemble a bell curve, he said. They ramp up gradually, experience a burst of activity, then slowly wind down.

With current demands, Drinkward said, planners aim for a smoother pace to better allocate resources among multiple projects. He said the big challenges come when something unexpected happens.

“In less busy markets you’re able to throw people at a problem,” he said, “and you just can’t do that now.”

Willy Myers is executive secretary of the Columbia Pacific Building Trades Council, which represents two-dozen building trades. He declined comment on Intel’s plans but acknowledged “unprecedented growth” in demand for construction work.

It’s the growth that’s remarkable, he said, not the level of work. Myers noted there were multiple chip factories built simultaneously during Oregon’s tech boom in the late ‘90s and said the industry was able to accommodate that.

So, one more big project wouldn’t tip the scales, according to Myers. He said the activity reflects the building sector’s ebb and flows.

“We have peaks and valleys in the construction industry,” Myers said. “It’s cyclical.”

Staff writer Jeff Manning contributed to this article.

-- Mike Rogoway | twitter: @rogoway | 503-294-7699