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Intel Corporation announced this week it will invest $20 billion in semiconductor chip fabrication plants, according to the Sacramento Business Journal. This is a big deal given the current global shortage in semiconductor chips. But also, it is important because semi-conductors will be a big part of new technology, including AI, cloud computing, driverless cars, and 5G. As one of the original Silicon Valley start-ups over 50 years ago, it is meaningful that Intel has indicated that none of this future investment in fabrication plants is going to California. Instead, Intel is headed east to Arizona.
Intel has been a Silicon Valley mainstay since the 1960s, founded in Mountain View by Robert Noyce and Gordon Moore. Originally famous for the first dynamic random-access memory chip, Intel switched its focus to microprocessors and became featured in many of the personal computers we use today.
Several of the experts who spoke to the Sacramento Business Journal said the decision was easy: it’s too politically difficult and expensive to manufacture in California. Also, fabrication plants need cheap electricity, water, and affordable land.
California has none of those. According to the U.S. Energy Information Administration, California’s industrial electricity rates are 2.3 times higher than Arizona’s. In a 2016 study by the U.S. Department of Energy, the water rate of Yuma, Arizona was three times less than Oakland, California. Finally, in a 2019 study on land value, Arizona’s land value per acre was approximately $4,328. How about California? It was $39,092, almost 10 times as much.
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Brandon Ristoff is a policy analyst for the California Policy Center.