Intel CEO says California has lost its luster- Arizona now has more Intel employees than Silicon Valley

Intel, the biggest success story to emerge out of California’s Silicon Valley, has ruled out any plans to expand in its home state, its chief executive said Tuesday.

By Eric Auchard, Reuters

Speaking before technology managers at the annual Gartner Symposium ITXpo conference here, Intel CEO Craig Barrett blamed what he called 20 years of political mismanagement of the California economy for driving Intel and other businesses out.

"California has to treat business as something it has to attract and nurture," the Intel executive and foe of excessive government regulation said.

Barrett, who now lives in nearby Arizona, has joined a chorus of executives who criticize California policies on workers’ compensation insurance, investments tax credits and generous spending on social programs as "anti-business."

In responding to the mounting political controversy over the transfer of jobs to lower-cost states as well as overseas, Barrett discounted plans by Governor-elect Arnold Schwarzenegger to reverse California’s job exodus.

"All this talk of offshoring (moving high-tech jobs to low-cost countries) is interesting, but it’s a microcosm of the larger issue of how the U.S. will compete" in a global economy, Barrett told an audience of 6,000 corporate technology buyers.

Intel, the world’s largest chip manufacturer, operates plants that stretch from Sacramento, California to Arizona to Israel and China.

Over the past decade, Oregon, on the northern border of California, has displaced California as the state with the largest number of Intel employees.

Arizona now has more Intel employees than Silicon Valley, where the company’s headquarters remain, although California is still ahead in overall employees when including its Sacramento plant. Intel employed about 78,700 people worldwide last year.

The Intel executive complained that, while much of the world seeks to lure high-tech businesses, California provides support to agriculture, steel, shrimp farming and other sectors he described as "19th century" industries.

Global economy moves on

He offered little if any hope of reversing course and expanding again within California, where Intel was founded in 1969.

"It’s quite simple," Barrett said when asked by Gartner analysts whether Intel would be hiring or expanding plant capacity in California in the future. Barrett fell silent and nodded his head decisively left and right, a wordless signal that his answer was a firm "No."

Later, Barrett partly qualified himself, saying that Intel would not slow the long drift of jobs and investments overseas "unless there was some dramatic change" in which Schwarzenegger succeeded in "rolling back" existing laws.

The actor-turned politician had made attracting businesses back to the state a central plank in his recent campaign for state governor in which he won in a landslide.

India, China and Russia alone now have somewhere between 250 million and 500 million highly educated knowledge workers between them, Barrett estimated, surpassing not just the population of California, but that of the entire United States.

Global competition and the maturing U.S. electronics market now means that 70% of Intel’s markets lie outside the United States and its investments reflect that, Barrett said.

"Our investments are really following our customers," Barrett said.
Copyright Reuters 2003.

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