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November 3, 2020 01:25 am

Intel Contemplates Outsourcing Advanced Production, Upending Oregon's Central Role

According to The Oregonian, Intel is "openly flirting with the notion of moving leading-edge production from Oregon to Asia and hiring one of its top rivals to make Intel's most advanced chips." The decision is likely in January. From the report: It's a momentous choice that follows a string of manufacturing setbacks at the Ronler Acres campus near Hillsboro Stadium, failures that have cost Intel its cherished leadership in semiconductor technology -- perhaps forever. Outsourcing wouldn't shutter Intel's Oregon factories or close down its Hillsboro research labs. The company says it's committed to maintaining its advanced research and retaining internal production capacity. It's continuing a massive expansion of its D1X factory in Hillsboro. In time, though, Oregon's central role in Intel's technology would almost surely erode if the company cedes manufacturing leadership to rivals overseas. Chip industry analyst Dan Hutcheson of VLSI Research believes that transition could render Oregon "irrelevant" if Intel gradually shifts away from integrated research and manufacturing. "Companies say they're making a transition. What they find is they're stepping off a cliff," Hutcheson said. "They're going down a road that you can't easily go back on." CEO Bob Swan told Wall Street analysts on a conference call earlier this month that it may outsource advanced production to its rivals -- he named Taiwan Semiconductor Manufacturing Co., specifically -- to ensure "a predictable cadence of leadership products." Swan told investors to expect a decision by late January. Intel already outsources as much as a fifth of its production but has kept the leading edge in Oregon. And whatever it decides on outsourcing, Swan said Intel will maintain its advanced research -- science performed in Hillsboro -- which he described as "a powerful force in creating future differentiation for our products." On this month's analyst call, Swan said Intel believes it can have it both ways -- sending advanced production overseas while retaining internal production for components and older products that don't require the most sophisticated technology. And Swan said Intel believes it could restore advanced manufacturing to its own factories sometime in the future, if it chooses to.

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