Intel shelves cutting-edge Arizona chip factory

Tue Jan 14, 2014 5:26pm EST
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By Noel Randewich

SAN FRANCISCO (Reuters) - Intel Corp (INTC.O: Quote), hit by slumping personal computer sales, has put off opening a major chip factory that President Barack Obama once held up as an example of U.S. manufacturing potential.

The "Fab 42" facility built in Chandler, Arizona, originally slated as a $5 billion project that in late 2013 would start producing Intel's most advanced chips, will remain closed for the foreseeable future while other factories at the same site are upgraded, said Intel spokesman Chuck Mulloy.

Intel's decision not to open the chip plant was first reported by the Arizona Republic on Tuesday.

"The new construction is going to be left vacant for now and it will be targeted at future technologies," Mulloy told Reuters.

Despite not opening the new factory, or fab, Intel has exceeded a target to hire over 1,000 employees since construction started in 2011, Mulloy said. Intel received state tax benefits for hiring those people.

Obama, while campaigning for re-election in 2012, made a stop at the factory's construction site, where he called for government incentives to attract manufacturing lost to Asia in recent years back to the United States.

Intel is the world's top chipmaker but it was caught off guard by smartphones and tablets, a computing revolution that has cut into demand for PCs, the company's core business.

Global PC shipments fell 10 percent in 2013, the worst year since market research firm Gartner began tracking those products.   Continued...

A video wall displays Intel's logos at the unveiling of its second generation Intel Core processor family during a news conference at the Consumer Electronics Show (CES) in Las Vegas January 5, 2011. REUTERS/Rick Wilking