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MAY 2006

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   A major plank in the new U.S. agenda is to not just extend but make permanent the R&D tax credit that expired at the end of 2005. Wondering whether an extension or permanent measure will or won't be passed only adds to CEO uncertainty already exacerbated by developments like the Cuno case just argued before the Supreme Court.
   "A permanent R/D tax credit would be a very positive step forward and is part of the PACE bills in the Senate," says Leising. Asked what kind of extension would be feasible if permanency is not possible, he says, "We will continue our efforts within the industry to get a permanent R&D tax credit and would rather not speculate on what's acceptable if the permanent tax credit is taken off the table. The U.S. government would be wise to make the research credit permanent and enhance it as much as possible to keep pace with other countries that are increasingly offering attractive research incentives."
   Those countries include India, where Intel is making a significant investment in an R&D center, and Vietnam, where a new $300-million fab project was just announced early in 2006, though government approval has been granted for an investment of more than $600 million.
   They also include Israel, where Intel started up Fab 18 in Kiryat Gat in 1999, after having conducted R&D in Haifa since the 1970s. Initially valued at $3.5 billion, the new investment in Fab 28 will include the hiring of 2,400 workers. A cornerstone ceremony was held in early February 2006, with an estimated completion date of 2008. The new fab will rise on a 175-acre (71-hectare) parcel adjacent to its existing facility (which employs 2,000) and will contain 200,000 sq. ft. (18,580 sq. m.) of cleanroom space. By contrast, illustrating Leising's observation about increased cleanroom investment, the original Kiryat Gat complex includes a 96,878-sq.-ft. (9,000-sq.-m.) cleanroom. The new Fab 32 in Arizona incudes plans for 184,000 sq. ft. (17,094 sq. m.) of cleanroom space.

Semiconductor Industry Association Competitiveness

American Competitiveness Initiative

Invest in Israel

   The company is in line to receive a $525-million grant from the Industrial Development Bank of Israel. Intel received a $580-million grant for its first fab, which was shown to generate more than $801 million in added value within the first six years. The same investment promotion center offering those incentives had recently rejected a grant request from Intel related to an upgrade at its existing Kiryat Gat plant. However, that upgrade grant was approved as part of the incentive package for the new plant.
   The company's other Israeli sites include design and development centers in Yakum and Petach Tikya, and the company's first non-U.S. wafer fab (Fab 8) in Jerusalem. All in all, some 5,400 people work at the company's Israel facilities.
   The nation is on a high-tech roll, welcoming investment, hiring and buy-out announcements in recent months from companies such as Siemens, Google, Sun Microsystems, Applied Materials and Cisco.
   While Leising was speaking from Rio Rancho, his personal itinerary puts a human face on what globalization means: "Depending on the year, I travel about 60,000 to 70,000 miles per year internationally, and maybe 35,000 domestically," he says. "I probably am out of town 40 percent of the time."

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