Intel CEO Pat Gelsinger says Oregon will remain the heart of the company’s research spending “forevermore” and that the company hopes to use federal CHIPS Act funding to build a major lithography research center in the state.
“As long as Moore’s Law is alive and well, I’ll be investing in Oregon,” Gelsinger told The Oregonian/OregonLive in an interview Tuesday. He said Intel’s Hillsboro research site plays a unique role for the company, central to his plans to revive the chipmaker’s fortunes.
“I would be reticent to constrain my dreams for how big it might be in the future,” Gelsinger said.
Intel’s CEO spoke ahead of a planned visit to the state Wednesday, where Gelsinger will attend events with U.S. Commerce Secretary Gina Raimondo and state political leaders, touting Oregon’s chip industry and the state’s campaign to win a share of the $52 billion in federal CHIPS Act subsidies approved by Congress last year.
Intel’s future in Oregon has been a hot topic since the company announced plans to build a brand-new manufacturing site and research hub near Columbus, Ohio, last year. That decision prompted a wave of alarm among policymakers questioning whether the state remained attractive to the chip industry, one of Oregon’s economic pillars.
Resulting legislation, due for a vote in the Oregon House on Wednesday after passing the Senate last week, would allocate $210 million in state funds to promote the chip industry and give Gov. Tina Kotek extraordinary authority to circumvent state land-use laws to designate large sites for industrial development.
Lawmakers are considering additional legislation that would reestablish state tax credits for corporate research spending in Oregon.
Semiconductors are the state’s largest export, and Intel is Oregon’s largest corporate employer, with 22,000 workers in Washington County. The company has manufacturing, research and corporate operations in and around Hillsboro, where its engineers craft each new generation of its microprocessor.
The company’s outlook has been in doubt, as has the fate of Moore’s Law itself. That’s the maxim coined by late Intel co-founder Gordon Moore in the 1960s, which correctly predicted generations of exponential growth in computing power at successively lower prices.
Intel sustained a series of manufacturing setbacks over the past several years that cost the company its technological lead, calling into question its ability to continue delivering major advances in computing power. Then, demand for PCs and servers slumped in the pandemic’s aftermath, cratering Intel’s core business.
A former Intel engineer who returned as CEO two years ago after running the software maker VMware, Gelsinger, 62, embarked on a plan to spend his way out of Intel’s technology deficit with new factories and new manufacturing capabilities.
He ran straight into a market downturn. As sales wilted, Intel laid off workers, cut wages and bonuses for senior employees and slashed its dividend by two-thirds to conserve cash.
“There was no surprise that this was a turnaround,” Gelsinger said. “This was rebuilding an iconic company.”
Intel is depending on billions in federal support from the CHIPS Act to help offset the cost of new factories in Arizona and Ohio. And Intel is counting on a new generation of patterning technology to restore the company’s manufacturing edge.
Key to that revival is a production tool called extreme ultraviolet lithography. Intel had delayed adoption of the new technology, leaving an opening for competitors to capitalize on the tool’s ability to imprint smaller patterns onto silicon wafers.
Under Gelsinger, Intel has reversed course, working with the tool’s Dutch manufacturer, ASML, to secure first use of new generations of its lithography technology. Gelsinger said the company wants to pursue future advancements by developing a new lithography research program with CHIPS Act funding.
“We would be arguing that the best place in the world to do that is in Oregon,” Gelsinger said, because that’s where Intel’s most advanced research takes place.
Intel completed a $3 billion third phase of its D1X research factory in Hillsboro a year ago. Intel has space for a fourth phase eventually, Gelsinger said, and could perhaps redevelop some existing Hillsboro manufacturing facilities in future decades.
For the near future, though, he said the lithography center would likely be the company’s next major Oregon endeavor – provided the project can secure federal support.
It’s not clear when that research money will be available, how much the lithography center would cost, or whether it would be a collaborative industry project or an initiative run by Intel. Gelsinger did say he anticipates working with Oregon universities and ASML.
The Commerce Department, charged with distributing the CHIPS Act funds, has prioritized allocating manufacturing dollars and hasn’t laid out a timetable for awarding research dollars as part of a new National Semiconductor Technology Center.
At Wednesday’s meetings in Hillsboro with Secretary Raimondo, Gelsinger said he, U.S. Sen. Ron Wyden, Gov. Tina Kotek and others will press Oregon’s case for federal investment.
“To land pieces of the CHIPS Act work in Oregon, that would be our objective, and it’s our mutual, shared objective,” Gelsinger said.
The Commerce Department has established a series of conditions for companies pursuing CHIPS Act funding, including requirements they plan for using diverse contractors, equity in workforce development and that they offer childcare support. The requirements have triggered outrage among some Republicans, who complain the Biden administration is using the federal money to impose its political agenda.
“It’s like we’re now mixing social policy with industrial policy,” Gelsinger acknowledged. But he said he agrees that workforce development is essential to the success of the CHIPS Act’s goal of reviving the domestic semiconductor industry and said he doesn’t object to the conditions the Biden administration set out.
“To be doing those kind of things to us is perfectly acceptable,” he said, “but it shouldn’t be seen as the center of industrial policy.”
The CHIPS Act aims to reduce reliance on advanced electronics from Asia by subsidizing new domestic factories and research. The most advanced chips come from Taiwan Semiconductor Manufacturing Co., whose founder, Morris Chang, has been skeptical of the American effort.
Chang has complained publicly that chipmaking in the U.S. is cost-prohibitive and that the United States lacks the engineering talent to deliver.
“Morris’s comments are not irrational. He is a very smart and capable guy,” Gelsinger said. But while TSMC has benefited from a tightly integrated relationship with the Taiwanese government, Gelsinger said it isn’t prudent to concentrate advanced manufacturing of a key technology in one country.
“That doesn’t solve the world’s geopolitical needs for balanced and resilient supply chains,” Gelsinger said. “And Intel has invested the core of our R&D for decades in the U.S. We’re committed to rebalance the supply chains of the U.S. and Europe.”
Intel’s own turnaround efforts remain a work in progress. Gelsinger said the company wasn’t prepared to capitalize on the rise in artificial intelligence, which requires specialized, high-performance computing systems. And Gelsinger acknowledged he hadn’t anticipated such a steep decline in computing demand following the pandemic.
“Seeing our business decline so rapidly in the face of the market? Wow,” Gelsinger said. “That wasn’t on the dance card when I took the job.”
Intel’s stock price, which had fallen by more than half since Gelsinger became CEO two years ago, has rebounded modestly in the past few weeks.
Intel reported last week that new generations of chips for data centers are on track and industry analysts said the PC market appears to have bottomed out and may be poised for a comeback. Gelsinger said the company’s engineering prowess has returned and insisted he’s confident in the direction he has set for the company.
“It’s a heavy job,” Gelsinger said. “But we see plenty of green shoots.”
-- Mike Rogoway | mrogoway@oregonian.com | 503-294-7699
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