Intel Plant Is Part of State’s Effort to Lure New Business : California economy: The Silicon Valley facility signals a new spirit of cooperation between public officials and industry.


Intel Corp.’s decision to add a $400-million microchip manufacturing plant at its Santa Clara headquarters signals a new spirit of cooperation between industry and government to keep business from leaving the state, company officials and Gov. Pete Wilson said Tuesday.

At an outdoor news conference attended by hundreds of Intel employees, company Chairman Gordon Moore and Gov. Wilson praised a joint effort involving government officials, representatives of environmental agencies and company executives.

A key to Intel’s decision, officials agreed, was eliminating about a year from the 18 months or more normally required to secure building and operating permits for a new factory. Intel also has chip plants in New Mexico, Oregon and Israel.


“We have very short production cycles,” Moore said later in an interview. “So getting really good cooperation to handle that problem was important.”

Intel is not the only company getting attention from the state. Commerce Department officials have established “Red Teams” to help scores of others deal with complex regulations. Increasingly, said Julie Meier Wright, director of the Commerce Department, the state is recognizing that “time is money” for businesses.

The Santa Clara facility, which will create 250 jobs, is the first major expansion of chip production in Silicon Valley in nearly a decade. It comes as a boost both for Silicon Valley, where thousands of high-tech jobs have been lost in the recession, and for state officials, who have come under intense fire from the business community over the issues of regulation, high workers’ compensation costs and other aspects of the “business climate.”

The loss of high-paying manufacturing jobs, many of them in defense and aerospace, has been particularly devastating for California since the start of the recession in mid-1990.

Spoiled by decades of seeing companies flock to California for its good weather, schools and markets, state officials have belatedly been stung by the realization that they must fight to keep and attract jobs.

In recent years, states such as Colorado, Arizona and New Mexico have used lower housing and labor costs and looser environmental restrictions to lure cost-conscious manufacturers.


It closed its last California chip making plants, in Silicon Valley and Livermore, in 1990 and 1991, although it maintains major research and development facilities in Santa Clara.

The nation’s leading independent chip producer, Intel makes microprocessors for 80% of all personal computers.


What got the ball rolling on the Santa Clara expansion, was a March visit by Gov. Pete Wilson to an Intel research, design and testing facility in Folsom, near Sacramento.

While there, Wilson praised the state-of-the-art technology but prodded Intel officials to think once again about locating manufacturing jobs in California.

The interest prompted Intel to consider existing space in Santa Clara as a site for its first commercial production of eight-inch silicon wafers, much in demand for advanced microprocessors.

“We weren’t planning to do any more manufacturing in California,” said Howard High, an Intel spokesman. “(But attitudes) have changed in the last year.”


The state’s enthusiastic recruitment efforts last spring had an ancillary benefit: Intel invited California, not previously a candidate, to compete for a planned $1-billion chip making plant that will employ as many as 1,200 workers.

The state Department of Commerce is spearheading an effort involving more than 40 governmental and private organizations to win the plant for Folsom.

But the effort has fierce competition from Oregon, Arizona, New Mexico and Texas, where Gov. Ann Richards wangled a bidding opportunity even though Intel has no other operations there.

In Santa Clara, construction of a 12,000-square-foot clean room where the wafers will be made has been underway for several weeks in a 300,000-square-foot research facility behind Intel’s headquarters. Wafer production is scheduled to begin in mid-1993.

* DEFENSE CUTS CAUSED ONLY 1 OF 5 LOST JOBS: Study urges action to improve business climate. D3.