Intel’s Domestic Investment

Brian Caulfield of Forbes announces some good news:

Intel Chief Paul Otellini said Tuesday that the chip maker will spend $7 billion over the next two years to upgrade its U.S. manufacturing facilities. He made the announcement in Washington, D.C., a surprising place for a chip maker to talk about something as nuts-and-bolts as building a new “fab,” or fabrication facility. Over the past eight years, Intel has built six new fabs, and upgraded another. Since 2002 it has invested $50 billion in capital and R&D in the United States. This is the first time an Intel chief executive has rolled out construction plans anywhere east of the Mississippi River. Even so, this is hardly a political, feel-good exercise. Intel needs its fabs–and in some ways, it doesn’t have much choice but to keep marching along to the relentless beat of technology ... For all the dollars involved in the upgraded fabs, there will be few “new” jobs. Instead, Intel executives say the investment will preserve about 7,000 skilled jobs in Oregon, Arizona, and New Mexico, where Intel will begin making the new processors first. Intel generates 75% of its sales outside the United States, but conducts about 75% of its semiconductor manufacturing inside the Unites States, the company said.

Hat tip to Josh Marshall who gets into the politics:

It's worth noting that the original announcement for the Arizona plant in 2011 was done during a visit by President Obama to an Intel plant in Oregon. So Intel's desire to add some presidential flavor to factory announcements is nothing new. But it again puts on display of corporate America's evolving and bifurcated relationship with President Trump: consumer brands conspicuously keeping their distance or actively criticizing the President while manufacturing brands openly work with him to give him credit for hiring decisions which likely have little or nothing to do with him. Intel is of course in some sense also a consumer brand. But since its products are almost always packaged within a piece of hardware produced by another brand - Apple, Lenovo, Dell, etc. - its consumer exposure is much less.

Given all the discussion of the Destination Based Cash Flow Tax, let’s note a few other statistics from their reported financials for 2015. Their total sales were over $55 billion with 75% being overseas even as most of its production was in the U.S. Intel’s pretax income was $14.2 billion with 62% of its sourced in the U.S. under the current corporate profits tax. I would imagine that Intel would receive a yuuuge tax break if the Destination Based Cash Flow Tax is enacted.