Site Selection Trends Global Forum: Building Science, Technology, and Innovation Capacity for Sustai

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Site Selection TrendsGlobal Forum Building
Science, Technology, and Innovation Capacity for
Sustainable Growth and Poverty Reduction
Nanci Palmintere Vice-President Global Tax and
Trade Intel Corporation Washington D.C, February
14, 2007
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Agenda

• Intel Corporation
• Investment Trends
• Investment Criteria
• Role of Governments
• Economic Impact

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Nearly 40 Years of Experience

• From our founding in 1968, weve grown into the
  worlds leading silicon innovator with over
  94,000 employees, approximately 300 facilities in
  50 countries, and 35.4 billion in revenues.

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Intels Worldwide Manufacturing Assembly Test
Operations
Washington Systems Mfg.
Ireland Fab 14/24
China Pudong A/T
Colorado Fab 23
Chengdu A/T
Oregon D1C/D1D Fab 20
Israel Fab 8/18
Mass. Fab 17
Board Mfg.
California D2
Costa Rica San Jose A/T
Arizona Fab12/22
New Mexico Fab 11/11X
Malaysia Penang A/T Kulim A/T
Philippines Cavite A/T
A/T Dev
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Investment trends

• Capital investment has shifted dramatically to
  emerging economies
• Alignment of capability, cost and marketplace
• Reliable infrastructure with quality service is
  now more readily available
• Education commitment in emerging economies has
  created a competitive workforce
• The market place changed with the growth in Asia,
  Eastern Europe, Latin America and META
• If you provide the infrastructure and workforce
  needs, the cost of doing business becomes the
  competitive advantage

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World GDP growth (B)Top Economies 2005 to 2020
2005

• Asian economies on the rise
• Western Europe declining
• USA maintains primacy

2020
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Global Manufacturing Trends

• Asia will keep dominating new MFG/ATM projects
• Serving the growing local markets, cost ,talent,
  and maturing supply chain are the key drivers

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Site Selection Criteria

• Site Infrastructure Characteristics
• Reliable, quality infrastructure at competitive
  price
• Large parcel infrastructure ready
• Proximity to HUB airport global logistics
  capability
• Operating Conditions
• Sufficient technical workforce capacity
• Adequate supply chain
• Cost structure
• Fast uniform permitting process
• Predictable low risk investment structure
• Favorable tax policy relative to capital
  intensive projects
• Minimal ownership or capital restrictions
• Open currency exchange
• Community Characteristics
• Experience alignment to High-Tech industry
• Employee amenities cost of living

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Infrastructure Requirements

• Competitive infrastructure/rates including
  utilities supply
• Alternative locations are global and regional
  pricing, although competitive among neighbors,
  may not be competitive to alternative locations
  outside the region being considered
• Depending on the company, these operating costs
  can significantly impact operations/financial
  sustainability
• Many locations will consider discounted
  infrastructure costs for utility supply
• Reliable utility supply w/ both Quality and
  Reliability
• Capability and commitment to supply the current
  base
• Foresight and planning for future conditions,
  such as growth
• Support and funding to accomplish plans, both
  technological improvements and utility system
  construction requirements
• For High tech companies or those with high
  reliability needs, is independent redundant or
  dual supply available

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Infrastructure Requirements

• Utility and infrastructure political environment
• The markets and technology are changing quickly,
  does this location offer stability enough to plan
  a long term investment, both financially and
  operationally
• Suppliers availability, talents and Mngt
  direction to support newest innovation or changes
  in the supplying system
• Environmental/ regulatory infrastructure risks
  as this climate changes, will location be at risk
  of supply or constrained with new laws or actions
  that increase cost or put risk to operation of
  supply

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Education/Workforce Requirements

• Skilled technical and business workforce
• Engineers of all types (electrical, chemical,
  material science)
• Business and professional (finance, human
  resources, purchasing, etc.)
• Technicians, especially equipment (for front-end
  manufacturing)
• Operators
• Accredited universities and technical colleges
• Internationally competitive curriculum, faculty
• Labs for research and hands-on
• In addition to technical skills, strong English
  language, problem-solving, data analysis
• Strong education pipeline
• Math, Science, Technology

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Role of Government

• Create government policy to promote economic
  growth, via the attraction of Foreign Direct
  Investment (FDI), that is designed to
• Increase job growth
• Increase capital flows and investment
• Increase research, development and technological
  transfers
• Stimulate economic growth
• And ultimately to produce and maintain a
  sustainable economic base that can support the
  underlying needs of the community or society
• And promote workforce development through
  partnerships with industry

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Economic ImpactCosta Rica example

• Intel is the leading exporter
• Intel has contributed
• an average of 20 to the
• country exports

Intel Proportion of its investment with respect
to the investment of selected categories in
Costa Rica. Averages 1997-2005

• Intel has been key to boost FDI in CR total
  invest

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Conclusions

• The door for emerging economies is open
• Marketplace shifts
• Infrastructure improvements
• Educational achievement
• Successful locations are ones that offer the best
  combination of
• Site Location that meets our operating
  requirements
• Offers a unique technical ecosystem
• Offers unique access to a growing market/customer
  base
• Low financial risk
• Low business operational risk
• Competitive cost (10 yr NPC model)
• Economic impact can be dramatic
• If operating conditions are not met, even the
  best financial deal will not be acceptable.
• Once operating requirements are met in multiple
  locations, the financial data becomes a key
  determinative factor, including the tax treatment
  and incentives.

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• Back-up

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Location StrategyEmerging Market Low Cost
Cities
Bias toward tech/science parks to manage risk
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Infrastructure Risk (2006)Economic Intelligence
Unit
Latvia Lithuania
Ukraine
Hung
Russia
Hungary Romania Bulgaria
Korea
United States
China
Pakistan
Japan
Israel
Morocco
Mexico
UAE
Egypt
Taiwan
Honduras El Salvador
Thailand
Saudi Arabia
Vietnam
Costa Rica
Philippines
Malaysia
Ghana
Singapore
India
Peru
Brazil
South Africa
New Zealand
Chile
Uruguay
Argentina
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Role of Government

• Stable Economic Political systems
• Minimal Ownership/Capital restrictions
• Foreign Ownership/Business Registration
• Capitalization Reqts
• Open Currency Exchange
• Intellectual Property registration/protection
• Competitive Cost structure
• Labor, Materials, Consumables, tax/duties
• Competitive Operating structure
• Physical/Site Infrastructure, Supplier Base
• Technical Workforce Capacity/Flexibility
• Logistics Infrastructure