Oregon Public Broadcasting

Intel announced  Tuesday that it will spend $7 billion -- more money than ever before -- on installing new technology in three of its factories. As Kristian Foden-Vencil reports, it’s a big gamble that comes at a time when most U.S. companies are holding economic fire.

Intel Senior Vice President Bill Holt says the new investment proves Intel is in Oregon for the long-run.

Bill Holt: “Oregon is the home to Intel’s largest site and with this investment, we’d like to keep it that way.” The announcement comes at a difficult time for the chipmaker. Last quarter, its net income fell 90 percent.  The company also started laying-off at least 5,000 workers by shuttering older chip fabs – one of which is in Hillsboro."

But Intel  says it will spend $7 billion over the next two years on plants in Oregon, Arizona and New Mexico.

The factories will be outfitted to produce smaller, faster chips built with transistors 32-nanometers wide.

The most advanced chips currently use transistors 45-nanometers wide. 2,000 of those would fit across the width of a human hair.

Governor Ted Kulongoski says the company’s announcement gives Oregon good reason to be optimistic.

Ted Kulongoski: “It is encouraging that with the headlines about the economy over the last several months, that we stand together with a positive message and another reason to have a positive outlook about Oregon’s future.”

Out at Intel’s campus in Hillsboro, employees were just learning about the investment.

Ryan Amy: “On a personal scale, it’s encouraging news.”

Ryan Amy, an engineering technician, thinks gearing-up during downtimes makes sound economic sense.

Ryan Amy: “It’s just been the general mindset behind the company that your strongest assets are investing in new technologies and investing for your future.”

He says that when the economy is struggling, that’s when you can get the biggest bang for your buck. Local congressman David Wu agrees -- calling the move: “real economic leadership.”

David Wu: “We’ve seen foreign companies do this repeatedly in the 1980’s and later. In downtimes they invested in the future and grew. I tell students on the capital steps all the time about how this nation passed the legislation to build the transcontinental railroad during the darkest days of the Civil War. And sometimes in really dark times you plan for the future and that’s when people look back and say, you know great people lived in that era.”

Still, the investment does not necessarily mean lots of new jobs.

Much of the money will be spent on the expensive new machinery that’s needed to build smaller microchips. Intel will also just keep the 7000 "highly-skill" workers that are already employed at its factories. But corporate affairs manager, Jill Eirland, says the spending will make extra work available.

Jill Eirland: “We anticipate hiring about 1500 contract workers. These workers will include technicians to install new tools; skilled workers who will reconfigure the factories; and manufacturers who will make the equipment.”

The company’s main rival, Advanced Micro Devices, recently announced that it has lost nearly $7 billion over the last two years. It’s spinning-off its factories into separate companies -- to unload debt and save money.

Still, for all Oregon’s enthusiasm at Intel’s announcement, Wall Street was not impressed. The stock dropped five percent on the news.