In a message he has been repeating all year, Intel CEO Pat Gelsinger emphasized the importance of the domestic semiconductor industry to a crowd of lawmakers and business leaders in Oregon at a crucial time for the company.
Intel (Nasdaq: INTC), which is based in Santa Clara, California, has 21,000 employees in Oregon, which is the company’s largest employee concentration and home to the chipmaker’s manufacturing R&D and leading edge manufacturing facility — in the industry called fabs.
In Arizona, Intel is also a major employer, with more than 12,000 employees based at the company’s Ocotillo Campus in Chandler. That’s Intel’s largest manufacturing site in the world, and it is set to grow even more with the $40 billion addition of two new fabs and 3,000 more jobs announced earlier this year.
Gelsinger used his talk at the 2021 Leadership Summit of the Oregon Business Plan to set the stage for a big ask. He and others in domestic semiconductor industry are working to shake loose billions in federal support for the industry, but the legislation is stalled in Congress. The Senate passed a bill that includes $52 billion in subsidies but the bill hasn’t been taken up by the House.
Since taking over as CEO, Gelsinger has made the national security element of chipmaking front and center. He told the Leadership Summit crowd that in the midst of a global chip shortage there are only three companies left that have the capability to make the most cutting edge chips: Intel in the U.S., Samsung in South Korea, and TSMC in Taiwan.
That number, he told the crowd, is down from 25 companies 20 years ago. Further, he noted that the percentage of chips made in the U.S. has been on steady decline for 30 years going from 37% to 12%. In Europe, that percentage has gone from 44% to 9%.
“The industry has largely moved to Asia. We have seen that acutely in this semiconductor shortage,” he said.
“Why did the industry move to Asia so acutely over the last 30 years? Did Oregon vote to remove the industry? We never said we didn’t want it,” he told the crowd. “The Asian countries said they did want it and they invested to bring it to Asia. What sits before Congress is, Do we want to level the playing field?”
He implored audience members to talk to their Congressional representatives to pass the federal legislation. Building a semiconductor fab is expensive. Gelsinger noted the company’s first fab in Oregon cost $7 million to build. Today, a new fab costs $10 billion.
Economic impact
Gelsinger said that as Intel grows and adds capabilities in a place it means the company’s suppliers and vendors also come and grow. The company contributed $3.89 billion to Arizona’s economy in 2019.
“We are committed to aggressively lead the rebuilding of the semiconductor industry in America,” he said.
Including the two in Arizona, Intel has five fabs under construction for the company’s new Intel Foundry Services business. The company is expected to announce one more U.S. fab soon as well as a new fab in Europe. Gelsinger noted the work and investment here is key to the company.
Samsung has already announced that it chose Texas over Arizona for a new $17 billion fab, and TSMC announced a $12 billion fab in Arizona.
Intel is finishing up a $3 billion expansion to its Oregon Ronler Acres fab called Mod 3. That facility, which makes the most cutting-edge products for Intel, should be operational early next year, he said.
Gelsinger said that next year, Intel is expected to spend a total of $25 billion to $28 billion on capital spending across its footprint.
Intel is in the midst of a potential turnaround under Gelsinger. In the last several years it lost manufacturing leadership and is now focused on getting that back with a lot of bold investment.
He ended his remarks by noting that it had been 10 years since an Intel CEO had made such public comments in Oregon. He said that will not be the case in the future.
“You will be seeing a lot more of me,” he said.