When the world’s largest computer-chip maker announced last month that it would shell out nearly $400 million to upgrade its Colorado Springs plant, technical workers may have breathed a collective sigh of relief-is that a light at the end of a very long tunnel?
It could be, if spending at two microchip manufacturing companies indicates a hiring spree in the near future.
Intel Corp., based in Santa Clara, Calif., is scheduled to expand the Springs plant’s manufacturing capabilities with the construction of another clean room of 80,000 square feet inside Fab 23, one of its newer factories. The project should fill to capacity the 11.5-acre building on Garden of the Gods Road.
The project is scheduled to be completed in late 2005, and may include the hiring of several hundred employees, mostly entry-level manufacturing technicians with the possibility of a few engineering positions, although Intel refused to say for certain how many employees would be hired.
Work began last month on the first phase of the project, budgeted at $43 million.
In the past several years, at least 6,000 local high-tech workers have lost their jobs in a series of layoffs that followed the technology sector bust of the late 1990s.
“The excess inventory has been worked off, as have the financial excesses of the sector,” said Rocky Scott, president of the Economic Development Corp. “Real demand has been building so the prospects for growth in the technology sector are continuing to improve.”
A sky-high supply and a faltering demand for microchips had a hand in the technology industry downturn a few years ago, leading to a number of jobs going overseas.
“It was inevitable that the bubble would burst. The companies and sectors that have survived and are now thriving will see a great deal of growth over the longer term,” said Larry Stimpert, an economist at Colorado College. “Virtually all the products and services we use today include some technological component. And we have not yet achieved in the United States the levels of penetration of some products and services that have been achieved in parts of Asia and Europe. Cell phone penetration here lags far behind levels in Scandinavian countries and in Japan, Korea and Hong Kong.”
In January, Intel began to establish a WiFi, or wireless fidelity, manufacturing method inside the existing clean room in Fab 23. Employees will construct WiFi chips, preset with Intel’s Centrino technology, for notebook computers.
Intel’s new module, or clean room, will concentrate on assembling WiFi computer chips and other communications chips on 200-millimeter wafers. Fab 23 will continue to produce flash memory chips, which are used primarily in cellular phones and other wireless devices, but in lower quantities.
“The new module will enable us to better deliver products for our communications business,” said Morgan Burke, plant manager for Fab 23. “The new process will utilize existing Intel 200-millimeter manufacturing tools, reducing the overall cost.”
Intel employs nearly 800 workers at its Colorado Springs plant-and employed between 1,100 and 1,200 at one time, according to spokeswoman Judy Cara-who earn an average $53,000 per year, exceeding the average annual household income of $38,000 for local residents.
Other planned local expenditures of the company never came to fruition.
In 2000 Intel announced it would spend $1.8 billion to renovate the half-vacant Rockwell plant on Garden of the Gods Road. In 2002 the company planned to spend $5.2 million for 700 acres of property near the Colorado Springs Airport, a move that city officials hoped would spur the hiring of thousands of people.
But as if to prove that the local high-tech industry really is booming this time around, Atmel Corp., a San Jose, Calif.-based semiconductor manufacturing firm with a plant in Colorado Springs, has been hiring operators-entry-level manufacturers-since January.
“We’ve been upgrading for the past 12 months, swapping out older equipment and bringing in new stuff,” said Atmel spokesman Jeff Katz. “We’ve spent close to $20 million in the last 12 months, and plan to spend another 15 to 20 in the next six months.”
Atmel operators predominantly earn less than Intel manufacturing technicians (who often have a college degree and experience). Katz said the fear of Atmel employees flocking to Intel is “always a concern,” but the company aims to make up for the wage discrepancy by offering a highly competitive benefits package.
“The last time I spoke to anyone there, Atmel was making a lot of chips for cell phones,” Stimpert said. “If Atmel picks up business that Intel is dropping, and Intel expands into WiFi chips, we could see some good net growth in this sector here.”
Intel, founded in 1968, has 78,000 employees worldwide and declared $30.1 billion in revenues in 2003. Founded in 1984, Atmel, a leader in the manufacture of integrated circuits, employs 8,000 employees and claimed $1.3 billion in revenues in 2003.
“The high-tech sector is one of the most dynamic in our economy-perhaps the most dynamic sector,” Stimpert said. “So, along with the technological advances and all of the many products and services that are based on these technological advances, we are going to see a lot of volatility. While I would guess the long-run growth trends in high-tech sectors are very positive, the growth will come with both ups and downs.”
The Colorado Springs economy can expect a slight boost in the short term, however.
“We are very unlikely to see the growth rates of the late ’90s,” Scott said. “The markets are more mature. Financial support is more rational and international competition is growing.”
Perhaps it isn’t too late for the city to become the next Silicon Valley.
“Colorado Springs is a location of choice for America’s best companies,” Mayor Lionel Rivera said. “We have a highly educated workforce, a top-notch research university and a beautiful environment.”