Friday, February 10th 2017

On Intel and Their $7B White House Affair

By now, we've all seen, or at least heard, about Intel CEO's Brian Kraznich Fab 42 announcement (done from the Oval Office, no less). It was to be a joint press conference to announce a highly impactful investment on U.S. soil, which also turned into some welcome PR for Intel, and got the CEO some face time with the President.

It has to be said though, that hailing this as a Trump administration win is simply politics doing its best: spinning the truth for its own benefit. I say this because the original announcement for the construction of this Arizona fab was done way back in 2011, with then Intel CEO Paul Otellini breaking the news that they would spend $5 billion on the plant during the Obama Administration. Construction started that year, with overall expectation for its completion being somewhere around 2013. Cue the usual delays, and enter 2013's 10% decline of the PC market, and Intel did what any sensible company would do in the wake of lower expected volume of shipments (and respectively lower production needs) - they postponed the opening of the factory, indefinitely, instead choosing to improve manufacturing capability of its then already-operational fabs. So, the factory wasn't announced because of President Trump's policies and overall government acumen, nor is it probably going to be finished by the time his first term ends.
Krzanich didn't make this announcement because the "tax and regulatory policies" of the Trump administration are "advantageous". Kraznich did it in a show of force and open support for President Trump (as Kraznich has a past of doing), and if there's one thing we know of Intel (and every other major corporation focused on profit) is that everything happens for the bottom-line. The question of "why now" isn't answered with "because of President Trump's policies". It's answered by Krzanich's internal memo to Intel employees: because growing demand means Intel must increase production capacity. A sign of the times is the fact that the Arizona fab was originally projected to push Intel's 14 nm manufacturing capability, but has now been re-purposed as an accelerator towards Intel's 7 nm aspirations.

Although it has to be said, as President Trump himself would, that Arizona workers will be very happy: 10,000 jobs is a whole big number - full of zeroes. Arizona is second only to Nevada in overall population growth rate, and job creation is one of the most important economic growth factors. Though that's not the real number of workers: that's the best-case scenario. The real number of direct jobs to be created by this investment is around 3,000, with up to 10,000 jobs being created "in support" of the factory, as Kraznich himself put it (such as new businesses opening to support the infrastructure and the increased number of employed workers).

In fact, President Trump's administration hasn't even made a concrete, thought-out move towards tax breaks on American companies, though he did promise a 15% reduction in taxes while campaigning. So far, the only thing they've done on that camp is freezing new and outstanding regulations to fall into place, as well as adopting a purely "less is better" approach to tax regulation: for every new tax regulation, cut two previously existing ones".

Now personally, I find it to be extremely disconcerting that President Trump's administration has the most clearly-defined trend of donations having bought top spots in the Trump administration, in what can be called influence peddling, even avoiding such boresome proceedings as ethic reviews for conflicts of interest.

All in all, I just think these are way too many coincidences to be just that. It seems simply as just yet another pivot, another case of one hand washes the other in the cutthroat world of corporate interests and political favor, of chess played (and paid) with billions. Let's face the proverbial elephant in the oval office: Intel's announcement is a complete farce, being indicative of an unhealthy balance of powers between those that be at the White House and corporate interests.

I understand how negative all of this sounds. But every case must be considered as-is, and this one simply isn't. There are healthy, transparent, strengthening bonds that a government can have with the corporations that are the lifeblood of its economic development, which positively impact the every-man's life. Tax cuts may be one of them, by increasing the amount of leeway a company can have on its own internal investment, R&D, increased employment and better conditions for its workforce. Government subsidies, which propel promising startups which then grow on to provide new, competitive businesses and thus reinforce the economy - of which Intel has received at least $5.9 billion dollars itself, from tax rebates to federal grants, including almost $100 million in property tax immunities (while AMD itself has received only about $11 million). Another good example is how governments supported what were, at their infancy, extremely low-margin business (like the solar panel and renewable energies companies), eventually ushering us all into developments that will only improve the quality of life for us and our children.

There are ways of doing things; both President Trump and Kraznich may even know how to do them, and have certainly done some of them before.

But then, then there are ways of how not to do things.
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199 Comments on On Intel and Their $7B White House Affair

#1
VSG
Editor, Reviews & News
Well written. It is not easy to tackle this issue, or any other on politics, on a tech media website. But when things happen that affect everyone, and especially us enthusiasts, then we owe it to ourselves to take a detailed eye at it- no matter where we lie on the political spectrum

Good job mixing in your opinion with facts, and as an editorial this was a good read.
Posted on Reply
#2
hat
Enthusiast
If you look in a little further, you'll see that Trump and some corporations are basically boosting each other. This is no different, just a PR stunt.
Posted on Reply
#3
dwade
In b4 liberals protest against Intel.
Posted on Reply
#4
Fluffmeister
Trump is a protectionist and Intel are fricking massive.

PS. America first, thanks for the investment, massive group hug.
Posted on Reply
#5
erixx
I saw this coming when your sister site posted the same.
First of all, why all these twisty stinky non-proven non-executed politics on TPU? Jumping on the daily hysteria bandwagon?
Why talk about a bunch of hair that tweets like farts that has not done anything yet?
Posted on Reply
#6
yotano211
100% pure 3 minute Intel commercial at the oval office.

How can a business decide on expansion when laws are not in even place yet.
Posted on Reply
#7
Thefumigator
Intel, which got that israeli genious team designing their chips, and then manufactured elsewhere, is the "least-American chip company" I can imagine.
Sure, Trump isn't well informed and he's not a techie either. If I was him I would look at AMD instead....
Posted on Reply
#8
Raevenlord
News Editor
VSG said:
Well written. It is not easy to tackle this issue, or any other on politics, on a tech media website. But when things happen that affect everyone, and especially us enthusiasts, then we owe it to ourselves to take a detailed eye at it- no matter where we lie on the political spectrum

Good job mixing in your opinion with facts, and as an editorial this was a good read.
Thanks a lot, VSG. There was definitely a hard, thin line to try and thread here
Posted on Reply
#9
ssdpro
VSG said:
Well written. It is not easy to tackle this issue, or any other on politics, on a tech media website. But when things happen that affect everyone, and especially us enthusiasts, then we owe it to ourselves to take a detailed eye at it- no matter where we lie on the political spectrum

Good job mixing in your opinion with facts, and as an editorial this was a good read.
+1

Raevenlord said:
Thanks a lot, VSG. There was definitely a hard, thin line to try and thread here
+1
Posted on Reply
#10
Basard
On property tax immunities.... Doesn't Intel own a LOT more property than AMD?
Posted on Reply
#11
Rictorhell
I look at it like this: IF 3000 jobs are being created here, in the US, versus somewhere else, even for marketing purposes or political purposes, it's still a good thing for those 3000 people, regardless.

I would HOPE that the average person would be able to look at the situation and perceive what is actually going on.

I don't forsee Trump getting a second term, BUT, if that happens it means 1) Four years from now the country is still here AND in one piece and 2) That Trump got SOMETHING right during his first term.

I love technology and computers so I root for Intel's continued existence and success but I also acknowledge that they are in it 99.9% for profit and MAYBE slightly for humanitarian reasons, if at all.

I wish there were more tech companies to root for but we're stuck with what we have.

When I think of Intel I really root for the company collectively, as a whole, because I know that most of their workers have the same struggles that I do and they probably see and hear from their CEO as often as I did Jeff Bezos when I worked at Amazon: NEVER.
Posted on Reply
#12
Xzibit
hat said:
If you look in a little further, you'll see that Trump and some corporations are basically boosting each other. This is no different, just a PR stunt.
Obama got Intel to invest 5 billion but only used 1.7 billion on that facility once it was halted it used the rest of the money to renovate existing factories

Trump got Intel to invest 7 billion. yet to see how its spent

2 billion difference.
Posted on Reply
#13
thebluebumblebee
Do you know how to kill a tech site? Introduce politics. Obama used Intel as well.
Posted on Reply
#14
VSG
Editor, Reviews & News
thebluebumblebee said:
Do you know how to kill a tech site? Introduce politics. Obama used Intel as well.
It's an editorial as opposed to a news article or a review. I don't have any issues with it, since it directly pertains to technology relevant to this website.
Posted on Reply
#15
theoneandonlymrk
Drama is made in the mind of the reader, it's fact based I liked it
Posted on Reply
#16
Evo85
For the love of all that's good, KEEP POLITICS OUT OF THIS SITE!

Stick with tech news and info please!
Posted on Reply
#17
TRWOV
Just a recommendation, why not mark this as an "editorial" in the title or something?

I mean, I concur 100% with all your points but strictly speaking this isn't news, it's an opinion piece.
Posted on Reply
#18
theoneandonlymrk
TRWOV said:
Just a recommendation, why not mark this as an "editorial" in the title or something?

I mean, I concur 100% with all your points but strictly speaking this isn't news, it's an opinion piece.
That I looked for , good point.
Posted on Reply
#19
claes
Much thanks to OP for the thoughtful, deliberate post.
Xzibit said:
Obama got Intel to invest 5 billion but only used 1.7 billion on that facility once it was halted it used the rest of the money to renovate existing factories

Trump got Intel to invest 7 billion. yet to see how its spent

2 billion difference.
???

Source for this? Because Intel did spend 1.7 billion on that plant, only it was back in 1980... the OP tells the rest of the story of the plant accurately, at least according to reports.

As far as reports are concerned, neither Obama or Trump had anything to do with Intel's investments into their plant, but more the conditions of the Wassenaar Arrangement.

The OP went through great lengths to show that Intel's decisions were unrelated to whoever was president at the time. I think this is important to note, not to avoid discussing politics, but to acknowledge the reality that Intel is a corporation that makes decisions based on their bottom-line.

http://www.bizjournals.com/phoenix/blog/business/2014/01/why-intels-new-17-billion-chandler.html
https://arstechnica.com/business/2017/02/intel-will-invest-7-billion-to-finish-a-factory-it-started-in-2011/
Posted on Reply
#20
alucasa
Don't bring politics to TPU.
Discussion of politics in a civilized manner never works. You might as well talk to a brick wall.

The same applies to strong brand loyalty some seem to have.
Posted on Reply
#21
Xzibit
claes said:
Much thanks to OP for the thoughtful, deliberate post.
???

Source for this? Because Intel did spend 1.7 billion on that plant, only it was back in 1980... the OP tells the rest of the story of the plant accurately, at least according to reports.

As far as reports are concerned, neither Obama or Trump had anything to do with Intel's investments into their plant, but more the conditions of the Wassenaar Arrangement.

The OP went through great lengths to show that Intel's decisions were unrelated to whoever was president at the time. I think this is important to note, not to avoid discussing politics, but to acknowledge the reality that Intel is a corporation that makes decisions based on their bottom-line.

http://www.bizjournals.com/phoenix/blog/business/2014/01/why-intels-new-17-billion-chandler.html
https://arstechnica.com/business/2017/02/intel-will-invest-7-billion-to-finish-a-factory-it-started-in-2011/
I believe your referring to this ?

BizJournals
Intel has been cranking out personal computer chips at its Chandler facility since 1980.
You do realize that Intel has 4 Fabs on that campus. Fab 32 said:
Intel Corp.’s decision to leave a roughly $1.7 billion fab in Chandler empty for now is an example of how fast the technology industry is moving away from what the semiconductor maker does best.
^Fab 42
Posted on Reply
#22
Serpent of Darkness
Evo85 said:
For the love of all that's good, KEEP POLITICS OUT OF THIS SITE!

Stick with tech news and info please!
Raevenlord pretty much open the floodgates on that. Intentional or not, him writing this basically gives everyone the thumbs up to talk about politics. To argue, comment, or encourage members not to write about politics, it is irrelevant at this point. The only reason why it is on TPU is because it relates to Intel. My only question is it intentional to brag about Trump helping to bolster his image, or is it simply to state some news about Intel building a factory.

Just my 2 cents:

When I read this article, what came to mind is this. If I wasn't mistaken, MSNBC mentioned that the government's spending budget would increase the deficit. I'm estimating it was going to be around 10x the current deficit over 10 years, but these figures could be exaggerated to some degree. What I am getting at in this post, Intel is probably going to get a handout from Trump so Intel can build their new factory. It would make sense if you consider the question why didn't Intel build their factory during Obama's administration if the capita was never an issues when they talked about it. The obvious difference would point out a rational course of action and why Intel is more motivated to move forward. If Intel is helping Trump improve his image, it isn't going to happen or even put a dent. I wouldn't even purchase a Cannonlake processor with 12c/24t at at 5.0ghz if it was some special i7 9800k "Trump Edition" dedicated to him. This thought alone would drive me to AMD, and i'd be looking to invest some big bucks in anything more than 18 cores per cpu for rendering.
Posted on Reply
#23
RejZoR
They'll create 10k jobs! YAY! They just forgot to mention they sacked 10K people from Intel recently. Coz that's inconvenient to say out loud...
Posted on Reply
#24
Raevenlord
News Editor
TRWOV said:
Just a recommendation, why not mark this as an "editorial" in the title or something?

I mean, I concur 100% with all your points but strictly speaking this isn't news, it's an opinion piece.
Yo be fair, it Is marked as editorial right under the title, in green :p
Posted on Reply
#25
siluro818
Nothing is apolitical, even political passivity. This article has a point that needed to be made.
Posted on Reply
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