This afternoon, Intel CEO Brian Krzanich stood beside President Donald Trump in the Oval Office and announced that his company would spend $7 billion to build a semiconductor factory in Arizona. The factory, called Fab 42, is expected to support more than 10,000 long-term jobs, with Intel employing 3,000 people directly.
It’s the kind of investment that Trump promised he would bring to America all along the campaign trail. And the president immortalized the moment with a tweet. The only problem is, Intel’s investment seemingly has little to nothing to do with Trump.
— Donald J. Trump (@realDonaldTrump) February 8, 2017
The Intel factory actually began in 2011; then-CEO Paul Otellini even gave President Obama a tour. Work on Fab 42 stopped in 2014, possibly because of slowing PC sales and Intel’s failure to make progress in mobile. (Intel said it didn’t need the additional manufacturing capacity.) Last year Krzanich announced a workforce reduction of 12,000 jobs citing a slowdown in PC demand.
Intel now wants to complete this factory because it needs to manufacture its next generation of processors, which require new equipment to make. The company needs these chips in order to stay competitive with ascendant technologies like those from ARM, which dominates mobile.
The fact that the $7 billion investment was announced today, when Trump is president, seems to be purely coincidental. Intel told CNBC that it’s receiving no federal incentives for the project, so it really seems like the Trump administration had no role in making this factory happen. That’s relevant for two reasons: for one, it’s yet another example of Trump getting credit for creating jobs when he in fact played no role; and two, it means that Intel is being pretty opportunistic.
By announcing this investment at the White House, Intel gets much more press than it otherwise would have — a “majority” of Intel’s manufacturing is already based in the US. It also manages to get on Trump’s good side. Intel may not be getting anything out of Trump right now, but it’s certainly hoping for regulatory changes in its favor.
“From a tax and regulatory position we have been disadvantaged relative to the rest of the world where we compete,” Krzanich wrote in an email to Intel employees this morning. “That’s why we support the administration’s policies to level the global playing field and make US manufacturing competitive worldwide through new regulatory standards and investment policies.”
So basically, Krzanich is hoping for tax cuts, looser regulations, and something like federal subsidies or a friendlier (cheaper) way to raise and spend cash.
Asked for comment, an Intel spokesperson reiterated that the company’s manufacturing has always been primarily based in the US. “However, we certainly support policies that enable and sustain American innovation, and we are pleased to have this investment in our US advanced manufacturing capabilities recognized by the administration,” said William Moss, a spokesperson for Intel.
Intel’s requests are all pretty typical for a major corporation. But the company is now very clearly in a situation where it’s trying to both get the best of Trump and Republican policies without putting off workers in the tech industry at large, who generally seem to be opposed to the president’s actions.
Krzanich deals with this explicitly in his email to Intel employees, framing it as an issue of engagement. “When we disagree, we don’t walk away,” he writes. “We believe that we must be part of the conversation to voice our views on key issues such as immigration, H1B visas, and other policies that are essential to innovation.”
But Krzanich has sent mixed signals on Trump. Earlier this week, Intel signed onto a briefopposing Trump’s immigration plan — it hasn’t, however, been particularly outspoken in condemning it.
as a company co-founded by an immigrant, we support lawful immigration. We will provide impacted employees with Intel’s full support
— Brian Krzanich (@bkrunner) January 29, 2017
While Krzanich said he wouldn’t throw support behind either presidential candidate last year, he planned a fundraiser for Trump shortly after the nomination was locked in. When attention was drawn to the event, Krzanich canceled it, saying he intended it to be “a conversation,” not a fundraiser.
Intel isn’t the only company in this position. Trump has gotten a bunch of tech CEOs into a room together to talk policy, and he has a regular meeting set up with industry leaders like Elon Musk. In many cases, these leaders find themselves in opposition to Trump’s policies but are trying to use his interest to find common ground.
Tacitly giving Trump credit for a $7 billion investment on a new factory may be a good political move for Intel, but it also shows the limits of its opposition. Given the chance, it’ll take the photo op.