Ryan Randazzo, and Jerod MacDonald-Evoy

The Republic | azcentral.com

The seventh-biggest company in Arizona is about to get even bigger, with Intel Corp. announcing it will bring 3,000 more workers to Chandler.

The company is investing $7 billion to finish a factory it launched in 2011 but never completed. It now plans to make its most advanced computer chips at the so-called Fab 42 off Dobson Road, one of two campuses the company has in the city.

Intel CEO Brian Krzanich met with President Donald Trump at the White House on Wednesday to make the announcement.

“This factory will help the U.S. maintain its position as the global leader in the semiconductor industry,” Krzanich said in a prepared statement.

Fab 42 was announced in 2011 and cost more than $1 billion. President Barack Obama in 2012 visited the Fab 42 construction site and used it as the backdrop for a speech about bringing back American manufacturing. "Fab" is used as a shortened form of fabrication facility.

But in 2014, the company announced it would not occupy the facility, and soon laid off 5,000 people companywide because of slow sales.

Back to Fab 42

The work to finish and stock the factory will start this year and take three or four years, said Stacy Smith, Intel's executive vice president of manufacturing operations and sales organization.

When Intel’s business slowed in 2011 and 2012, the company only finished the building shell and most of the infrastructure.

“We still have quite a bit to do to get it into the space so it is ready for tool installation and to ramp the factory,” Smith said.

Construction will create about 3,000 temporary jobs, he said.

Much of the work in the factory will be in massive clean rooms, where the air is purified and employees wear protective suits to keep impurities off the chips they are handling.

Intel has about 11,000 workers in Arizona today, and was the seventh-largest employer in the state the last time The Arizona Republic calculated the figures in 2016.

Smith said the project should create about 10,000 jobs in the area, including the 3,000 Intel workers, plus contractors who maintain equipment and suppliers who will ramp up in the area to serve the facility.

Financial considerations

When Fab 42 was first announced, state economic development officials praised state tax changes passed in 2005 that benefit companies with a large presence in the state but that make few of their sales within the state.

The "sales factor" change allowed companies to calculate corporate-income taxes based solely on in-state sales if they made an investment of $1 billion or more in a new project; that change is what prompted Intel's original investment in Fab 42, officials said at the time.

The building also has a foreign-trade-zone status that reduces state and local property taxes for Intel.

According to salary-tracking by the job-posting website Glassdoor.com, technicians working for Intel in Chandler make about $57,000 on average a year, but several engineering positions pay $90,000 or more.

When built, Fab 42 was to be used for what the company calls 14-nanometer manufacturing. Now Fab 42 is being planned for 7-nanometer manufacturing. One nanometer is about one-billionth of a meter. The progressive move to smaller chips supports Moore's law, a concept formed in the 1960s by Intel co-founder Gordon Moore that says the number of transistors placed on semiconductors will increase because of technological advancements.

Increasing the number of transistors essentially allows more computing power at a lower price, increasing the capabilities of a variety of smart devices.

The work in Fab 42 will "be the most advanced semiconductor process technology used in the world," the company said. The chips made there will power computers, data centers, sensors and other devices. Intel says the chips will enable things such as artificial intelligence and advanced transportation.

“It will cement Chandler’s place as the technology and innovation hub of the Southwest,” Chandler Mayor Jay Tibshraeny said at City Hall on Wednesday.

Chandler currently claims nearly 21,000 technology jobs, at companies including Orbital ATK, Waymo (formerly the Google self-driving car project), a General Motors Innovation Center, Microchip Technologies, Garmin, and Local Motors.

The city will help with infrastructure such as water and sewer, but is not providing any cash incentives, Tibshraeny said.

Intel and Trump

The mayor said that in his conversations with Intel, the company always makes clear that the city is competing globally for any investment the company makes there.

Tibshraeny thanked Trump for whatever nudge he might have provided in encouraging Intel’s investment, but noted the previous administration also supported the facility and that the city has worked hard to keep the company happy.

“It takes a village to keep Intel in Chandler,” he said.

While Intel has opposed Trump's temporary travel ban in court, Smith said the company "is apolitical. We don’t support a party or an administration. We work with everyone whether it is Democrats in Congress and the White House or Republicans in Congress or the White House.”

He said two of the most important issues to the company are investment policies and the ability to attract talented workers, including those from overseas.

“Because we do the majority of our manufacturing in the U.S., and 80 percent of our market is outside the U.S., we care about investment policies that allow us to be on an equal playing field with other companies,” Smith said.

“And we care greatly about being able to hire the best and the brightest around the world, because it is the people that make a great company,” he said.

“In this case we are in agreement with the administration’s investment policies in the U.S., and in disagreement around some of the issues around immigration,” Smith said.

The expansion should benefit the entire region, officials said. High-tech, high-wage manufacturing jobs are coveted throughout the country, and generally have cities competing to land them.

Arizona State University already has an extensive relationship with Intel, which is expected to grow with the company, said Sethuraman Panchanathan, ASU vice president and chief research and innovation officer.

The university offers online courses and programs for Intel material-scientists and is working with Intel on projects in Vietnam and Dublin, not to mention Intel’s involvement in the remodel of Sun Devil Stadium to incorporate more technology, he said.

“We are looking at how can it be a living, breathing environment,” Panchanathan said of the stadium.

Intel has 17 employees serving as adjunct faculty at the university and more than a dozen on advisory boards.The company has also invested more than $20 million in various ASU programs in the past decade, he said.

“We work with Intel on many, many fronts at ASU,” he said. “We are very excited by this news and committed to helping Intel, whatever they may need.”

Deal at a glance

What: Intel will revive a factory in Chandler that was mothballed in 2014.

How much: $7 billion investment.

Jobs: 3,000 new Intel workers, plus about 7,000 more contractors and suppliers.

11,000: Number of Intel workers in Chandler today.

To make what? Intel will make new, smaller, faster chips that will be used in advanced data applications, such as devices that rely on cloud computing.

Intel projects in Arizona

2001: Opens a $2 billion advanced, high-volume computer-chip factories, Fab 22.

2007: Opens $3 billion Fab 32, touted as the world's most-advanced semiconductor factory.

2009: Announces it will spend $3 billion upgrading and merging two of its three plants to make smaller, faster chips for computers, smartphones and other devices.

2010: Reports that it will spend $6 billion to $8 billion to upgrade and retrofit four plants in Oregon and Arizona, with work in Chandler on Fab 12 and Fab 32.

2011: Announces it will invest more than $5 billion to build Fab 42 to be completed in 2013.

2014: Company announces the mostly completed Fab 42 will not be used for the foreseeable future.

2016: Intel announces 560 jobs cuts in Chandler amid wider layoffs.

2017: Announces Fab 42 will get a $7 billion investment to be completed and opened in three to four years.

Source: Republic research.