Intel defies gloom with investment
Updated on 10 February 2009
Intel Corp. plans to spend $7 billion upgrading its US factories over the next two years, a sign that the recession hasn't extinguished chip makers' lust for cutting-edge equipment.
The company's investment, announced by Intel CEO Paul Otellini at a speech in Washington, speaks to the semiconductor industry's need to keep investing heavily, regardless of the economic climate.
That will likely be a boon to companies that produce chip-making equipment, like Applied Materials Inc. and KLA-Tencor Corp., and is another example of how Intel's deep pockets have kept rival Advanced Micro Devices Inc. at bay.
AMD, having lost nearly $7 billion over the past two years, wants to break off its factories into a separate company to unload debt and save money. AMD is the world's No. 2 maker of personal-computer microprocessors, after Intel.
Intel said the $7 billion will pay for new machinery at factories in Oregon, Arizona and New Mexico, which will be outfitted to produce chips based on 32-nanometer technology.
But Intel's investment doesn't necessarily mean lots of new jobs will be created. The money will pay the salaries of about 7,000 "high-wage, high-skill" jobs that already exist at those plants.
Otellini said some construction jobs will be created as the factories are outfitted with the new gear, but added that Intel wanted to deploy the technology in facilities where the company already had lots of engineers and technicians, to speed the time to market.
He added: "From our perspective this is a cheaper, better technology. Spending this money will lower our costs and give us more competitive products. It's something that's fundamental to our business model."
The investment comes as Intel is cutting up to 6,000 manufacturing jobs by closing plants in Malaysia and the Philippines and stopping production at facilities in Oregon and California.
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