Intel Walks the Talk

You can't blame Intel (Nasdaq: INTC) for not putting its money where its mouth is.

The chip giant has committed to spending $5 billion on a down-home chip plant in Arizona, hot on the heels of CEO Paul Otellini landing a seat on President Obama's recently started Council on Jobs and Competitiveness.

I can't think of a better move to cement Otellini's place on that council than injecting billions of dollars into American construction, followed by about 4,000 permanent jobs at the site. Intel may sell most of its products overseas, but remains committed to a mostly American manufacturing base. Taiwan Semiconductor Manufacturing (NYSE: TSM) and United Microelectronics (NYSE: UMC) aren't likely to see outsourcing orders from Intel as long as Otellini runs the show.

Intel sees its top-notch manufacturing operations as a competitive advantage to hold rivals Advanced Micro Devices (NYSE: AMD), NVIDIA (Nasdaq: NVDA), and the legion of ARM Holdings (Nasdaq: ARMH) partners at bay. Making stuff may be cheaper in the Far East, but keeping its factories close to home gives Intel greater insight into and control over the process. It's not far-fetched to assume that this policy results in a tighter ship, which in this case would translate into higher manufacturing yields. That's an alternative road to lowering costs.

Otellini is only the second member of Obama's reformed job-creating committee, following the appointment of General Electric CEO Jeff Immelt in January. It remains to be seen whether Intel can leverage that high-profile appointment as another weapon in its arsenal, but I'd be shocked if Otellini didn't give it the old college try.

Few businesses have a stronger reputation for hardnosed business practices, after all, and some would even call the company heartless. The warm-and-fuzzy aura from Intel's large impact on the American market for high-tech jobs may ameliorate that impression but can't completely erase it.

Want to keep the chip leader honest? Add Intel to your watchlist.