Arizona, others take drastic steps to land Intel expansion

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Hardware

When Intel Corp. site location managers gather later this year to decide where they want to build their next $2 billion chip manufacturing plant, they'll have no shortage of prospects looking for their business.

Locales that already host Intel operations, including Arizona, are offering hundreds of millions of dollars in tax breaks if the semiconductor giant will expand in their areas and bring in hundreds of high-paying jobs.

Three weeks ago Gov. Janet Napolitano signed a bill passed by the Arizona Legislature that changes the way state sales taxes are calculated to give major interstate corporations such as Intel a big break on their sales taxes. The sales tax break, which would take effect if Intel invests a minimum of $1 billion, comes on top of already existing foreign trade zone status for the company's Ocotillo campus in Chandler, which greatly reduces Intel's property taxes on the site.

But the new law, generous though it is, only gives Arizona a chance to sit at the poker table. Other states are in this game too, hoping to lure Intel with their own tax incentives. Local governments in Hillsboro, Ore., where Intel has its largest manufacturing complex, have agreed to give the company $579 million in tax breaks if the company expands there. Also late last year Sandoval County, N.M., approved a $16 billion industrial revenue bond agreement with Intel that will give the company tax abatements during the next 30 years.

These are just the latest examples of how Intel has proven itself adroit at winning tax and other advantages. In 1997, Fort Worth, Texas, offered tax incentives for Intel to locate a factory there, but that project eventually was cancelled when the semiconductor market slumped. As a result, Intel didn't collect on the tax breaks.

Overseas, Ireland offered Intel a grant for construction of a new fabricating plant, but the company withdrew its grant application when the European Union opposed the deal. The company is continuing construction, and the plant is scheduled to go on line in the first half of next year.

To critics, such "incentives" amount to little more than blackmail.

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