Power Crisis Is Likely to Short-Circuit Intel Expansion in California

Intel Corp. Chief Executive Craig Barrett said the No. 1 computer-chip maker is unlikely to expand in California any time soon because the state’s energy crisis has made power supplies unreliable and costly.

“Would I OK the expansion of anything in Silicon Valley right now? Not a chance,” Barrett said.

“Will I build my new facilities in Oregon and Arizona and New Mexico and Ireland, and even Hudson, Mass., and Israel, where I can get an assured supply of power? Absolutely, yes, and that’s where my expansion is going.”

California’s move to deregulate energy has backfired, resulting in higher costs while putting the state’s two largest utilities on the verge of bankruptcy. Santa Clara-based Intel, the state’s second-biggest company by market value, risks losing millions of dollars whenever power fluctuates even for a fraction of a second because chips being made can be ruined, Barrett said.

California lawmakers are considering a plan from state Treasurer Philip Angelides to sell $10 billion in bonds to purchase the power grid and build power plants. Barrett said he opposes that plan.

“I’m not a great fan of government getting involved in the private sector, especially delivering a key commodity to the private sector,” Barrett said at the Consumer Electronics Show in Las Vegas.

“It’s deregulation gone awry.”

“I’d rather see supply and demand get in balance by expediting the permitting process to get more supply built if we have to and increase the grid infrastructure to import more power.”

Barrett criticized government officials for blocking proposed construction of new power plants, citing the move by San Jose officials to deny Calpine Corp.’s bid to build a plant late last year.

“Nuclear power is the only answer, but it’s not politically correct,” he said.

Intel employs about 10,000 workers in California and has plants in Folsom, with engineering and other corporate offices in Santa Clara and San Diego.

The chipmaker has 80,000 employees worldwide.

The energy crisis could ultimately have a broader impact on the state’s economy if companies such as Intel seek to add workers elsewhere.

In the meantime, Barrett said he leaves the lights off in his office during daylight hours.

Intel is seeking to trim energy consumption by 10% by taking measures such as dimming lights and turning off air conditioning in offices, Barrett said.