As PC Sales Drop, Intel Delays A Plant Opening And Cuts Jobs : All Tech Considered Intel planned to open a massive chip plant in Arizona, and President Obama even visited it and called it "an example of an America that's within our reach." But demand for PCs has slowed, and the company is rethinking its next moves.

As PC Sales Drop, Intel Delays A Plant Opening And Cuts Jobs

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Earlier this month, Intel announced it would delay the opening of a massive $5 billion factory in Chandler, Arizona. Then, a few days later, the computer-chip maker made headlines again when it said it would cut more than 5,000 jobs.

From member station KJZZ, Peter O'Dowd has a history of the troubled project.

PETER O'DOWD, BYLINE: As far as factories go, this one was about as ballyhooed as they come. In 2012, President Obama visited Intel's Ocotillo campus in suburban Phoenix the day after his State of the Union address.


PRESIDENT BARACK OBAMA: Because, honestly, first of all, who wants to miss out on a chance to see the crane? That thing is huge.

O'DOWD: Mr. Obama stood beneath a towering crane at the construction site, a crane so big, it could lift 4,000 tons. The president then boasted that Intel's factory, known as Fab 42, would someday crank out even more high-powered computer chips for laptops and phones.


OBAMA: The factory that's being built behind me is an example of an America that is within our reach: an America that attracts the next generation of good manufacturing jobs.


O'DOWD: Oh, what a difference two years make. I'm not far from the very spot where the president spoke. That multi-billion dollar factory he was raving about is finished, but there's nothing happening inside it. I asked Intel to join me here, but instead, they sent me a statement that said the new factory space would be set aside for future use. Many of the 1,000 or so jobs the project was supposed to have created have been relocated to other buildings on this sprawling industrial complex.

ANDY NG: When I think about Intel, it's a company in transition.

O'DOWD: Morningstar analyst Andy Ng follows the semiconductor industry. He says Intel hit headwinds when demand for personal computers plummeted in favor of tablets and mobile phones. Indeed, the company's stock has stagnated since the day Mr. Obama made his visit to Arizona.

NG: When you look at what Intel was planning for Chandler, I don't think they figured the PC market and the demand for PC processors would decline so quickly.

O'DOWD: The problem is that 60 percent of Intel's business comes from the processors inside PCs. The company said this month that revenue would be flat in 2014, a big reason for the 5 percent haircut in its global workforce by the end of the year.

NG: Remember, this is a big organization, too, right. So you can't just right the ship overnight.

O'DOWD: And some industry experts believe Intel has recognized its imbalance. Ng says it's transitioning well into the race for smartphones and tablets. He sees potential in the company's push for building cloud storage and server capacity for the crush of new mobile devices popping up around the world. And there's something else.

ROGER KAY: There's one fork in the road for Intel that it is thinking about going down.

O'DOWD: Roger Kay follows the industry with Endpoint Technologies Associates.

KAY: And that is becoming a foundry, or making parts for other companies.

O'DOWD: Kay says Intel has the industry's most advanced manufacturing techniques, and smaller chip designers would pay to fill some of the empty factory space in Arizona. Still, Kay says this potential doesn't completely take the sting out of Intel's recent trouble.

KAY: I imagine that neither Obama, nor Intel would like to be reminded of that day when they proclaimed the factory the greatest thing since sliced bread for the American public. It's true, it's kind of a setback.

O'DOWD: For its part, Intel won't say when it plans to remove the mothballs from Fab 42. But the company does point out that a $300 million research building will open nearby within six months.

For NPR News, I'm Peter O'Dowd, in Phoenix.

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