Intel's campus in Aloha was the company's first Oregon site -- and its first manufacturing facility outside California -- when it opened in the 1970s. Mike Rogoway/The Oregonian
Over the five decades Intel has operated in Oregon, its local footprint had moved in just one direction: Upward.
From a single factory in Aloha that opened in 1976, the chipmaker grew into the state’s largest corporate employer and one of Oregon’s primary economic engines. Intel spent billions of dollars every year to equip its Hillsboro factories and brought top scientists from around the globe to Oregon to develop the world’s most advanced computer chips.
Intel would sometimes cut jobs during fallow periods but it backfilled them almost immediately. As recently as last year, the company was touting a massive expansion that could add thousands more Oregon jobs.
Instead, Intel has embarked on an unprecedented and sustained campaign to shrink its business in response to a series of technical and financial crises. And Oregon is bearing the brunt of the pain, with Intel making the deepest cuts to its local workforce ever.
Intel has eliminated at least 5,400 Oregon jobs since August – including 2,400 layoffs in just the past week. The company’s local workforce appears to have fallen under 18,000, the lowest point in more than a decade. Sources inside Intel say there are more cuts to come in the weeks ahead.
Many of those who lost their jobs worked in technical fields in an industry that pays an average wage of $180,000 a year. Those were great jobs and helped buoy the whole state, but most won’t find similar work locally.
“A lot of them are likely going to have to leave Oregon, which means that we lose our friends and neighbors, their talent and we lose that tax base as well,” said Hillsboro Mayor Beach Pace.
Intel’s struggles, coupled with setbacks at other Oregon institutions like Nike and Oregon Health & Science University, could put the state’s knowledge economy at risk.
Or, the workers who run those organizations could spark an eventual rebound in the state’s economy instead of a downward spiral.
“The pool of human capital that we already have, the knowledge, the skilled workers that we have, that is to some extent a buffer against potential snowballing of these effects,” said Rajiv Sharma, economics professor at Portland State University. “But of course there’s no guarantee.”
Bigger was better
Intel’s troubles started several years ago in its Hillsboro research labs, where scientists pioneered many generations of new microprocessors. The company’s engineers continually pushed the limits of physics, cooking up new recipes for more sophisticated computer chips that led the industry.
Since Intel’s technology was the most advanced, its processors ran nearly every PC and data center. That, in turn, gave Intel the resources to invest in future innovation.
That all went wrong in the years leading up to the pandemic, though, when Intel suffered years of delays in a key new chip technology just as rivals began moving ahead with their own, more advanced processors.
Intel embarked on an expensive campaign to catch up under former CEO Pat Gelsinger. But investors were turned off by the tens of billions of dollars he planned to spend, reluctant to risk throwing good money after bad, and Intel’s board forced out Gelsinger in December.
While Intel has paused plans for factories in Germany, Israel and Ohio, the company says Oregon remains central to its future. It has told state officials that an expansion it began two years ago will move ahead.
“Oregon will continue to play a critical role in Intel’s global operations, serving as the epicenter of our cutting-edge semiconductor research, technology development, and manufacturing,” the company said in a statement Monday.
Still, new Intel CEO Lip-Bu Tan says layoffs are a necessary step to restore the company’s competitiveness.
“It’s simple math,” Tan told employees last week. He noted that rivals Nvidia and Taiwan Semiconductor Manufacturing Co. have — combined — only slightly more employees than Intel. And they are far more profitable.
Intel has laid off about 4,000 workers across the country in just the past week. Tan said a smaller company will move faster and make better decisions.
For Oregon, though, bigger has always been better.
The state’s general fund – which pays for all manner of public services, from schools to public safety to health-care – is heavily reliant on personal income taxes, especially from large, high-wage employers like Intel.
Many years ago, Oregon lawmakers remade the tax code to dramatically reduce the tax burden for multinational companies like Intel that do most of their business out of state. And local officials exempted Intel from most local property taxes, reasoning that if Intel spends billions to equip its Hillsboro factories then good jobs will follow.
Local tax breaks saved Intel more than $1 billion in just the last five years.
Even skeptics acknowledge that the bet paid off — until now, at any rate.
“That’s been true. The size of Intel has grown,” said Jody Wiser of the watchdog group Tax Fairness Oregon. “I live in Washington County. Many of my neighbors work for Intel and their suppliers.”
A vulnerable moment
Intel’s huge Oregon footprint was an economic asset for the state in good times. Now, in retreat, the company could become a liability.
And Intel’s stumbles come at a particularly vulnerable moment.
“Oregon’s monthly employment trends have shifted. Growth has slowed noticeably,” said Gail Krumenauer, economist with the Oregon Employment Department.
The state’s job growth has stalled, unemployment is up and laid-off workers are spending longer on the jobless rolls. The Oregon Department of Transportation is preparing to lay off hundreds of workers in response to its own budget crunch, and Krumenauer noted that federal workers who have been on paid leave could soon be formally laid off as the Trump administration moves aggressively to shrink the government.
“There are some pressures that we could see in other sectors in the coming months,” Krumenauer said.
That leaves state officials trying to navigate a perilous economic climate without depending on Intel to find its way out of its own troubles.
“Intel’s challenges do not reflect the quality of the technology workforce in Oregon,” said Roxy Mayer, spokesperson for Gov. Tina Kotek. She said Kotek wants to boost economic prosperity regardless of industry, and to keep Intel’s laid-off workers in the state.
“She will be focused on working with other technology companies to make sure our world-class talent stays in Oregon,” Mayer said.
U.S. Sen. Ron Wyden partnered with Intel to build federal support for the domestic semiconductor industry during the Biden administration. On Monday, Wyden reiterated his support for the semiconductor industry in a statement to The Oregonian/OregonLive – but notably, he didn’t mention Intel by name.
“I will never stop working to ensure the United States, with Oregon playing a primary role, leads the world in designing and manufacturing this key product here,” Wyden said. “The industry has weathered tough cycles before and I will also keep working with state officials and others to ensure semiconductor companies know that Oregon is one of our country’s semiconductor centers.”
-- Mike Rogoway covers Oregon technology and the state economy. Reach him at [email protected] or 503-294-7699.
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Tatum Todd and Tristin Hoffman contributed to this report.