President Donald Trump met with Brian Krzanich, the chief executive of U.S.-based technology company Intel, on Wednesday to announce a $7 billion investment in an advanced computer chip factory in Chandler, Arizona.
Speaking from the president’s side in the Oval Office, Krzanich said that the facility, called Fab 42, would employ 3,000 people at its peak and indirectly create 10,000 jobs in the Arizona area in support of the factory.
In remarks to the news media, Trump said Intel is a "great, great company" and a "great thing for Arizona."
"Brian called a few weeks ago and said, ‘We want to do a very big announcement having to do with our country, but also having to do mostly with Arizona and the jobs and the great technology that will be produced,’ " Trump said.
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In his remarks, Krzanich echoed the president’s broader economic message of employing Americans and increasing exports rather than imports.
"Intel is very proud of the fact that a majority of our manufacturing is here in the U.S. and the majority of our research and development is here in the U.S., while over 80 percent of what we sell is sold outside of the U.S.," Krzanich said.
Krzanich said the company decided to make the announcement in response to Trump’s business-friendly policies on taxes and regulation. But some analysts raised the question of whether Intel would have made the investment sooner or later.
"This would have happened anyway. This was always part of their plan," said Jim McGregor, an analyst at Tirias Research in Phoenix. "But obviously, the current administration and Intel are going to try to get some political gain out of it."
McGregor said the announcement was a positive sign for Intel but not a significant strategy or policy change. He described Intel and other chipmakers as having a rotation cycle in which they periodically update, build and shutter facilities.
The Chandler facility was built years ago, but Intel postponed its opening in 2014 amid decreased global demand for its products, the Portland Oregonian reported at the time. For years, the factory has been an empty shell while Intel focused on its other facilities.
It is not clear when Intel planned to bring the Chandler facility online, but the company probably would have completed its investment at some point, McGregor said. As Intel invests in Arizona, it’s also likely to retire older facilities in other areas – including perhaps a factory in Rio Rancho, New Mexico, McGregor said.
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The Chandler facility will be completed in three to four years, a company announcement said.
Krzanich, in his remarks, said that Intel had been working on the factory for several years but had "held off actually doing this investment until now." In response to a question from the news media, he said Intel decided to make its announcement in support of the Trump administration’s tax and regulatory policies, which "really make it advantageous to do manufacturing in the U.S."
Krzanich also took aim at past government policies, saying Intel had been able to achieve its success despite regulatory and tax policies that "disadvantaged us in the past relative to the competition we have across the world."
"The president and the administration’s commitment to tax reform, smart regulation and deregulation, and a general attitude of ‘make it in America’ has given them the confidence and the will to move forward," said Reed Cordish, a Trump assistant.
Pointing out that the product was high-tech, cutting-edge technology, Cordish added, "It’s a wonderful statement for where we’re heading, bringing manufacturing back to America, creating 21st-century jobs in America and the feeling of optimism and confidence that CEOs all over the country are showing and a validation of the president’s policies and views."
Intel joined more than 100 companies to file a legal brief opposing Trump’s Jan. 27 executive order, which barred entrants to the United States from seven majority-Muslim countries.
In a letter to employees Wednesday about the investment, Krzanich briefly mentioned the controversy. "When we disagree, we don’t walk away. We believe that we must be part of the conversation to voice our views on key issues such as immigration, H1B visas and other policies that are essential to innovation."
Since Trump’s election victory, numerous companies have announced plans to create or retain jobs in the United States. Yet some analysts have said that many of those plans were in the works before the election or had come at significant cost to taxpayers.
In November, air-conditioning company Carrier announced that it would keep hundreds of factory jobs in the United States that were slated to move to Mexico. While Trump celebrated the announcement as a win, later reporting revealed that Indiana had agreed to give the company up to $7 million in tax credits.
In December, when Japanese corporate giant SoftBank said that it would invest $50 billion and create 50,000 jobs, analysts said that those funds probably would have been destined for the United States anyway.
Intel’s stock rose after the announcement but pared gains before the market closed. The stock ended the day up 0.08 percent, underperforming overall gains by the tech-heavy Nasdaq composite index.
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