Intel

Feb. 22, 2011

Transcript:

Ted Simons: Today's news on the jobs front comes after a huge announcement last week that Intel is opening up a new chip manufacturing plant in Chandler. The $5 billion plant will be the most advanced high-volume semiconductor manufacturing facility in the world. And it will create a lot of jobs. Here to talk about the facility is Jason Bagley, Intel's southwest government affairs manager. Good to see you again. Thanks for joining us.

Jason Bagley: My pleasure. Thank you.

Ted Simons: Why Chandler for this big, new plant?

Jason Bagley: Over the years, Intel has been able to deliver results out of Arizona. And these things don't happen in a vacuum. It requires really a community of effort to position the site, to be competitive and I think one of the primary drivers with this decision is the employee work base. And the employees here in Arizona have become so productive. They've been a deliverer of our products quickly and they've been able to ramp new technologies very quickly here, so we have a great track record. That coupled with the great relationship we have with the city of Chandler, working with Maricopa County, as well as the state has enabled us to create a very competitive climate for investment here. And so it was a natural place for Intel to make this investment, and the investment is very strategic. It positions us for our future growth and to be able to meet the capacity that our market is going to require.

Ted Simons: I want to get back to that employee work force, that base in a second here. But the plant will produce what, these 14 nano -- what are we talking about here? These micro, micro chips.

Jason Bagley: It sounds like magic when you try to comprehend what it is that we do. The product that Intel produces is really the most complex thing that humans manufacture on the planet. We have the world's leading manufacturing sites for semiconductor chips here in Arizona. This plant is going to produce the semiconductors on a 300-millimeter waver which is about that big. The chips that are on there will be produced at a 14 nano meter level. One nano meter is a billionth of a meter. Tiny tiny. To put that in perspective, it's about 1/90,000th width of a human hair. That's the kind of detail we'll be manufacturing of our products in this new plant.

Ted Simons: That's the reason this new plant will cost $5 billion? That's a lot of money. How come so expensive?

Jason Bagley: Our business is extremely expensive. That's why they're really just a small number of companies worldwide that can do what we do. Our business is very capital intensive. So the buildings themselves aren't that expensive. I mean, they're still billion dollar plus structures, but the real cost of our factories goes into the tools. If you can imagine football fields full of 10 to $40 million tools per tool that go into our clean rooms. They're extremely expensive and capital intensive.

Ted Simons: Let's talk about jobs here. How many jobs does Arizona see because of this announcement? And how many of those jobs are permanent?

Jason Bagley: With this announcement we're projecting thousands of new permanent Intel jobs, as well as construction jobs, to enable that project. We're not releasing the bottom line numbers yet on head count, but the site will -- in fact, we're hiring right now for the announcement that we made back in October which is converting our two existing factories at that same location. As we prepare to construct this new facility, we're going to be hiring that many more. So if you go on Intel.com and look under "Jobs" and search under the site, you're going to find hundreds and hundreds of jobs now open.

Ted Simons: I'm sure the site will get quite a workout after that statement.

Jason Bagley: I hope so.

Ted Simons: Are we talking about high wage jobs for the most part?

Jason Bagley: Intel employees in Arizona earn an average of about $122,000 a year. That's total compensation. So that's salary, bonuses, stock and benefits. So the overall compensation for an Intel employee here is pretty significant. We'll continue to push in that area.

Ted Simons: You mentioned quality work force. I know people like to hear that. Especially the quality of the schools and the universities. They like to hear that, but how much of that really was a factor? You're saying that's a pretty big deal?

Jason Bagley: It's a significant factor. The schools around our site, where our employees live are critical not only for our employees' quality of life and the education for their children and Intel employees get very involved in education and volunteer thousands of hours each year in the classroom, but our work at the universities is very significant. In fact, at Arizona State University, Intel hires more graduates out of that university than anywhere else, across all the disciplines that Intel employs. So we do hire a substantial number into Intel out of Arizona, but we do also pursue the top talent, the brightest minds of the world.

Ted Simons: The decision was obviously made in the past somewhere -- how long ago? What are you talking about here in terms of a timetable? Because some folks are wondering since this was announced so closely after the jobs bill, if there was some sort of factor there. Was there?

Jason Bagley: It's not related to the passage of the jobs bill this session. The decision was made a while ago, and Intel is continually looking at its product road map. Where do we need to go and where do we need to position our capital investments in order to facilitate that road map to address the market. So the decision was made independent of this bill. However, decisions that were made prior to this, policies that were in place prior to this absolutely impacted this decision. And it's helped create an environment where capital investment is valued and it's encouraged.

Ted Simons: I assume you're talking about the R & D credit and the foreign trade --

Jason Bagley: The R & D credit, the sales factor, foreign trade zone treatment for these very capital intensive sites. There aren't very many of them in Arizona, so it's kind of a unique situation. But it brings -- it brings the liability for a very expensive site where the valuation, if it were treated the same as all other businesses, it would be skyrocketing and just not very inviting. We simply wouldn't be making those investments.

Ted Simons: A couple of quick questions here. How many folks does Intel right now employ in Arizona?

Jason Bagley: Just under 10,000.

Ted Simons: And that will increase, won't it?

Jason Bagley: Absolutely.

Ted Simons: And when does construction start on this baby? And how long is it going to take before it's in operation?

Jason Bagley: When Intel makes a decision, we move fast. So we're going to begin construction on this new factory mid-2011. So very shortly. And we anticipate that it will be completed by the end of 2013.

Ted Simons: All right. Good to see you

Jason Bagley: All right. Thank you