www.pwc.com/us/
Intel’s Economic
Impacts on the US
Economy, 2008 - 2012
Intel’s Economic
Impacts on the US
Economy, 2008 - 2012
December 17, 2013
Prepared for Intel Corporation
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Contents
Executive Summary
1
I.
Introduction
5
II.
Industry Classfication
7
III. Intel’s Economic Impact through its Operations, Capital Investments, and
Distribution Channels
9
IV. Intel’s Economic Impact by Sector
16
V.
18
Intel’s Products and Services Impacts
VI: Case Studies
28
Appendix A: Data Sources and Methodology
58
Appendix B: Intel’s Indirect and Induced Impacts on the US Economy by Sector
61
Appendix C: Literature Review
66
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Intel’s Economic Impacts on the US Economy,
2008 - 2012
Executive Summary
Intel Corporation and its wholly-owned subsidiaries (“Intel”) design and manufacture
advanced integrated digital technology platforms. A platform consists of a
microprocessor and chipset, and may be enhanced by additional hardware, software,
and services. The platforms are used in a wide range of applications, such as PCs,
laptops, servers, tablets, smartphones, automobiles, automated factory systems, and
medical devices. Intel also develops and sells software and services primarily focused on
security and technology integration.
Intel Corporation engaged PwC to assess its economic impacts on the US economy. This
report provides PwC’s economic impact estimates for Intel in terms of employment,
labor income, and gross domestic product (or GDP) for 2008 - 2012. 1 These impacts are
further highlighted through a series of case studies on important contributions Intel
makes to the US national and local economies.
Key Findings
Intel, the world’s largest semiconductor manufacturer,2 has a widespread economic
impact throughout all sectors of the US economy through its operations and
investments. Intel not only provides a large number of jobs to US workers,3 but also
invests heavily in the United States: since 2009, the company has announced plans to
build two new factories in Oregon and Arizona and upgrade its existing manufacturing
facilities in those two states and in New Mexico with next-generation technology. Intel
is currently ranked first in R&D among US public companies and it is the fifth largest
capital investor in the United States.4 In addition, Intel’s products and services directly
boost economy-wide productivity.
A company’s GDP is also known as its value added, i.e., the additional value created at a particular stage
of production. It is equal to the company’s sales less its purchases from other businesses. It can also be
measured as the sum of employee compensation, proprietors' income, income to capital owners from
property, and indirect business taxes (including excise taxes, property taxes, fees, licenses, and sales taxes
paid by businesses).
2 See IBISWorld Industry Report 33441a, “Semiconductor and Circuit Manufacturing in the US,” August
2013, pg. 29.
3 According to Intel’s 2012 Annual Report, approximately 51 percent of its 105,000 worldwide employees
are located in the United States, with the majority of the company’s microprocessor manufacturing being
done at facilities in Arizona, Oregon and New Mexico.
4 Scott Thurm, “Behind the Big Profits: A Research Tax Break,” The Wall Street Journal, June 14, 2013;
Diana G. Carew and Michael Mandel, “U.S. Investment Heroes of 2013: The Companies Betting on
America’s Future,” Progressive Policy Institute, September 2013.
1
1
Intel’s Economic Impacts on the US Economy, 2008 – 2012
A. Quantitative Analysis
In 2012:





Intel employed 53,200 full- and part-time workers in the United States. Each
job at Intel is estimated to support more than 13 other jobs elsewhere in the US
economy.
Intel paid out a total of $9.3 billion in wages and salaries and benefits and
directly contributed $26.0 billion in GDP in 2012.
Counting economic impacts through operations, investments, and distribution
channels, Intel’s total employment impact on the US economy was 774,600 jobs.
Counting economic impacts through operations, investments, and distribution
channels, Intel’s total impact on labor income (including wages, salaries,
benefits, and proprietors’ income) was $52.2 billion.
Counting economic impacts through operations, investments, and distribution
channels, Intel’s total impact on US GDP was $95.8 billion.
Cumulative Economic Impact, 2008-2012:






Intel’s direct employment in the United States increased from 44,800 in 2008
to 53,200 in 2012.
Intel paid out a total of $39.4 billion in wages and salaries and benefits (in
current dollars) over this period and directly contributed a total of $120.7 billion
(in current dollars) to GDP.
Intel’s total employment impact on the US economy through operations,
investments, and distribution channels rose from 581,600 jobs in 2008 to
774,600 jobs in 2012, or an increase of 33 percent.
Intel’s total impact on labor income through operations, investments, and
distribution channels for the period was $214.6 billion (in current dollars).
Intel’s total impact on US GDP through operations, investments, and
distribution channels for the period was $408.5 billion (in current dollars).
Between 2007 and 2011, the most recent 5-year period for which relevant data
are available, Intel’s products and services are estimated to have contributed
$54.8 billion in GDP (in current dollars) to the US economy through its impact
on total factor productivity and capital deepening.
Intel’s direct, upstream, and downstream impacts on the US economy for the 2008 –
2012 period are summarized in Table E-1.
2
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table E-1.− Intel’s Impacts on the US Economy, 2008 – 2012
Item
2008
2009
2010
2011
2012
Em ploy m ent*
581,600
584,500
600,900
7 08,900
7 7 4,600
Direct impact
44,800
44,500
44,1 00
50,1 00
53,200
441 ,800
444,400
460,1 00
554,300
606,300
95,000
95,600
96,7 00
1 04,500
1 1 5,1 00
$37 ,328
$37 ,541
$40,032
$47 ,503
$52,226
$6,7 00
$6,854
$7 ,7 43
$8,859
$9,283
$25,090
$25,004
$26,452
$32,328
$35,87 8
$5,538
$5,683
$5,837
$6,31 6
$7 ,065
GDP ($ m illions)
$7 4,97 4
$7 3,434
$7 6,196
$88,07 5
$95,802
Direct impact
$23,951
$22,801
$22,939
$25,001
$26,044
$41 ,541
$40,940
$43,293
$52,307
$57 ,7 20
$9,483
$9,694
$9,964
$1 0,7 67
$1 2,038
Indirect and induced impacts
Upstream (operations and capital investment)
Downstream (distribution channel)
Labor Incom e ($ m illions)**
Direct impact
Indirect and induced impacts
Upstream (operations and capital investment)
Downstream (distribution channel)
Indirect and induced impacts
Upstream (operations and capital investment)
Downstream (distribution channel)
Source: Intel data on direct employ ment and labor income and PwC calculations using the IMPLAN modeling sy stem.
Note: Details may not add to totals due to rounding.
* Direct employ ment is defined as the num ber of full- and part-tim e jobs. Indirect and induced em ploy m ent includes pay roll em ploy m ent and self-em ploy m ent.
** Direct labor income is defined as wages and salaries and benefits. Indirect and induced labor incom e includes wages and salaries, benefits, and proprietors' incom e.
3
Intel’s Economic Impacts on the US Economy, 2008 – 2012
B. Qualitative Case Studies
In addition to the significant economic impact generated from Intel’s operations and
capital investments at locations with large Intel manufacturing facilities in Oregon,
Arizona and New Mexico, there are other impacts related to job creation and talent
growth, innovation, industry leadership, supplier benefits and clustering impacts. To
qualitatively assess Intel’s impacts in these areas, PwC and Intel jointly identified three
themes that would be the focus of three field-level case studies of Intel’s operations and
investments in the United States.5 PwC developed these case studies through interviews
of external stakeholders and industry experts. Quotes from some of these respondents
are included in the highlights below.
1. Research and Development (“R&D”) – In 2012 Intel’s global R&D spending
was $10.1 billion, with a five-year R&D spend of over $36.5 billion. US-based
R&D spending accounted for the majority of the total global spend in 2012. In a
2013 survey conducted by Booz & Co, Intel was the number one R&D spender
among publicly traded US companies in all sectors. Interview respondents called
Intel’s R&D efforts in the United States “rich with innovation” and “industryleading,” pointing to years of being on the “leading-edge of development” and
“bringing forward technology that matters.”
2. Supply Chain Ecosystem – Intel maintains and interacts with a vast supply
chain as both a consumer and a supplier. With $11B in global capital
expenditures (about 80% in the US) and $53.3 billion in global sales, the
company operates in the middle of a supply chain that is continuously improving
the usability and interactivity of technology. Interview respondents described
Intel’s impact on its Oregon supply chain as “the most important economic factor
in Oregon” and that Intel “makes a difference and is stable in our economy.”
Furthermore, industry veterans viewed Intel as a company that “kept the
manufacturing and expertise in this country [US]” and noted that “without Intel,
the semiconductor industry would be considerably less US-centric and further
behind.”
3. Venture Capital – Since its inception in 1991, Intel Capital has invested more
than $10.8 billion in over 1,276 companies in 54 countries. Intel Capital’s
investment in the US Technology industry has been evident with $6.7 billion, or
62% of its total capital investment going to US-based companies. Furthermore,
Intel Capital’s focus on company building has resulted in over 500 acquisitions,
mergers, and IPOs. Intel Capital’s contribution to the US economy and business
environment goes beyond capital investment. As industry experts and executives
of former portfolio companies stated, Intel Capital is “among the best in knowing
the industry” and their “stamp of approval is hard to match.” Intel Capital’s
advantages are described as “longevity, experience, size, consistency, and
financial returns were among the best, if not the best of any unit.” Portfolio
For the purposes of the Case Studies, Intel refers to Intel Corporation, excluding McAfee and Wind River
subsidiaries.
5
4
Intel’s Economic Impacts on the US Economy, 2008 – 2012
companies benefit from investments and interactions that “helped us to span out
geographically and grow the sales team.”
5
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Intel’s Economic Impacts on the US Economy,
2008 - 2012
I.
Introduction
This report estimates the US economic impact of Intel Corporation and its whollyowned subsidiaries McAfee, Inc. and Wind River Systems, Inc. (“Intel”) in terms of
employment, labor income, and gross domestic product (or value added) for 2008 2012. These impacts are highlighted through a series of case studies on important
contributions Intel makes to the US national and local economies.
The IMPLAN model, an input-output model based on federal government data, was
used to quantify the economic impact of Intel on the US economy for each year from
2008 through 2012.6 As described below, three types of economic impacts attributable
to Intel – direct, indirect, and induced – were quantified:



Direct impact measures Intel’s jobs, labor income, and gross domestic product
(or GDP).
Indirect impact measures the jobs, labor income, and GDP occurring
throughout Intel’s supply chain, including both its upstream purchases from
suppliers and the downstream impacts associated with the distribution of Intel’s
products through its wholesalers, distributors, and retailers.
Induced impact measures the jobs, labor income, and GDP resulting from
household spending of labor and proprietor’s income earned either directly or
indirectly from Intel’s spending.
For the indirect and induced impacts, the report considers both operational impacts
(due to purchases of intermediate inputs and payments of labor compensation) and
capital investment impacts (due to investment in new structures and equipment).
This report also separately estimates the impact of Intel’s products and services on
other sectors of the US economy, such as through productivity enhancement.
It should be noted that this report reflects Intel’s gross contribution to US employment,
labor income, and gross domestic product (GDP), and does not account for potential
redeployment of labor and capital in the absence of Intel’s US operations.
The rest of this report is organized as follows. Section II defines the primary industries
in which Intel Corporation and its wholly-owned subsidiaries operate. Section III
estimates Intel’s upstream (operations and capital investment) and downstream
(distribution channel) impacts on the US economy for 2008 through 2012. Section IV
estimates Intel’s economic impact by US industrial sector. Section V discusses the
economic impacts of Intel’s products and services. Section VI presents three case
studies that build upon the quantitative analyses to further highlight Intel’s economic
The IMPLAN input-output economic modeling system is developed by the IMPLAN Group LLC. The
IMPLAN model is based on input-output tables that map the flow of value along the supply chain for
different industries in the economy.
6
6
Intel’s Economic Impacts on the US Economy, 2008 – 2012
impacts from a qualitative perspective. A description of the data and methodology used
in this report is in Appendix A. Appendix B provides additional detail on Intel’s
indirect and induced impacts on the US economy by sector. Appendix C summarizes
the economic literature on the Information and Communications Technology (ICT)
sector’s impact on productivity and economic growth.
7
Intel’s Economic Impacts on the US Economy, 2008 – 2012
II.
Industry Classification
Intel Corporation and its wholly-owned subsidiaries McAfee, Inc. and Wind River
Systems, Inc. encompass a number of activities that span separate industry
classifications in government economic data. For this report, Intel Corporation’s main
economic activities are classified under “semiconductor and other electronic component
manufacturing.” McAfee, Inc.’s and Wind River Systems, Inc.’s activities are classified
under “software publishers” and “custom computer programming services,”
respectively.
Intel Corporation designs and manufactures advanced integrated digital technology
platforms. A platform consists of a microprocessor and chipset, and may be enhanced
by additional hardware, software, and services. Intel Corporation sells these platforms
primarily to original equipment manufacturers, original design manufacturers, and
industrial and communications equipment manufacturers in the computing and
communications industries. The platforms are used in a wide range of applications,
such as PCs, laptops, servers, tablets, smartphones, automobiles, automated factory
systems, and medical devices.
McAfee, Inc. develops and sells software and services primarily focused on technology
security including integration of anti-malware, anti-spyware, and antivirus software for
personal computers, computer networks and other systems around the world. Wind
River Systems, Inc. develops embedded and mobile software enabling companies to
develop, run, and reliably manage device software.
Intel’s three main business segments fall within the following industrial categories in the
North American Industry Classification System (“NAICS”) (see Table 1):
1. NAICS 334413. Semiconductor and related device manufacturing.
This subsector comprises establishments primarily engaged in manufacturing
semiconductors and related solid state devices. Examples of products made by
these establishments are integrated circuits, memory chips, microprocessors,
diodes, transistors, solar cells and other optoelectronic devices.
2. NAICS 51121. Software publishers. This subsector comprises
establishments primarily engaged in computer software publishing or publishing
and reproduction. Establishments in this industry carry out operations necessary
for producing and distributing computer software, such as designing, providing
documentation, assisting in installation, and providing support services to
software purchasers.
3. NAICS 213112. Custom computer programming services. This
subsector comprises establishments primarily engaged in writing, modifying,
testing, and supporting software to meet the needs of particular customers.
8
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Business
Segment
Intel
Corporation
Table 1.− Intel by Business Segment
IMPLAN
NAICS
Description
Sector
Semiconductor and related device
334413
243
manufacturing
McAfee, Inc.
51121
345
Software publishers
Wind River
Systems, Inc.
541511
371
Custom computer programming
services
9
Intel’s Economic Impacts on the US Economy, 2008 – 2012
III.
Intel’s Economic Impact through its
Operations, Capital Investments, and Distribution
Channels
Key Findings:




Intel’s total employment impact on the US economy rose from 581,600 jobs in 2008 to
774,600 jobs in 2012, or an increase of 33.2 percent.
In 2012, Intel employed 53,200 full- and part-time workers in the United States. Each job at
Intel supported more than 13 other jobs elsewhere in the US economy.
Intel’s total impact on labor income was $52 billion in 2012 and nearly $215 billion over the
2008-2012 period.
Intel’s total impact on US GDP was $96 billion in 2012 and more than $408 billion over the
2008-2012 period.
This section presents Intel’s economic impact on the US economy through its
operations, capital investment, and distribution channel. The results reflect the impact
of Intel Corporation, and its wholly-owned subsidiaries, McAfee, Inc. and Wind River
Systems, Inc. The total economic impact includes:
1. Direct impact (the jobs, labor income, and GDP within Intel),
2. Indirect impact (the jobs, labor income, and GDP occurring throughout the
upstream and downstream supply chain of Intel), and
3. Induced impact (the jobs, labor income, and GDP resulting from household
spending of income earned either directly or indirectly from Intel’s spending).
Upstream impacts arise from Intel’s operations (due to both purchases of
intermediate inputs and payments of labor compensation) and capital investment (due
to its investment in new structures and equipment). Downstream impacts arise from
Intel’s distribution channel and include the operational impacts of Intel’s
distributors. Intel’s distribution channel includes wholesalers, distributers, and
retailers. Each business in Intel’s distribution channel provides jobs and labor income
and generates GDP.
The IMPLAN input-output model was used to estimate Intel’s economic impacts on the
US economy over the 2008-2012 period.7
When comparing this report to other input-output analyses, note that not all input-output analyses
necessarily incorporate capital investment and/or distribution channel impacts.
7
10
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Employment
Intel employed 53,200 US workers in 2012. In addition, Intel indirectly supported
721,400 other full-time and part-time jobs in the US economy: 496,300 from Intel’s
operations; 110,000 from Intel’s capital investment; and 115,000 from its distribution
channel. Combining the direct, indirect and induced impacts, Intel’s total employment
impact on the US economy is estimated to be 774,600 full-time and part-time jobs in
2012, roughly ½ of 1 percent of total US employment.
Intel’s total employment impact on the US economy rose from 581,600 jobs in 2008 to
774,600 jobs in 2012 (see Table 2). The largest component of Intel’s total employment
impact is attributable to its operational supply chain.
Table 2.− Intel’s Impact on US Employment, 2008-2012
[Direct impact and indirect/induced impacts due to operations, capital investment, and distribution]
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2008
Direct
2009
Operational
2010
Capital Investment
2011
Distribution Channel
Source: Intel data on direct employment and PwC calculations using the IMPLAN modeling system.
11
2012
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Labor Income
According to Intel, it paid $9.3 billion in wages, salaries and fringe benefits to its US
employees in 2012. Including the jobs indirectly supported by Intel through its
operational spending, capital investment, and distribution channel, the associated total
impact on US labor income (including wages and salaries and benefits as well as
proprietors’ income) is estimated to be $52.2 billion in 2012.
Intel’s total impact on US labor income grew each year from $37.3 billion in 2008 to
$52.2 billion in 2012 (see Table 3).
Table 3.− Intel’s Impact on US Labor Income, 2008 – 2012
(In billions of dollars)
[Direct impact and indirect/induced impacts due to operations, capital investment, and distribution]
$60
$50
$40
$30
$20
$10
$0
2008
Direct
2009
Operational
2010
Capital Investment
2011
Distribution Channel
Source: Intel data on direct labor income and PwC calculations using the IMPLAN modeling system.
12
2012
Intel’s Economic Impacts on the US Economy, 2008 – 2012
GDP
PwC estimates that Intel’s operations directly generated $26.0 billion of GDP to the US
economy in 2012. Intel’s operations indirectly generated an additional $48.4 billion to
the US economy in 2012, while its capital investment and distribution channel impact
added another $9.8 billion and $12.0 billion of GDP, respectively. Combining the
operational, capital investment, and distribution channel impacts, Intel’s total GDP
impact on the US economy was $95.8 billion, accounting for 6/10 of 1 percent of US
GDP in 2012.
Intel’s GDP contribution to the US economy grew from $75.0 billion in 2008 to $95.8
billion in 2012 despite a slight reduction in 2009 to $73.4 billion during a period of US
economic contraction (see Table 4).
Table 4.− Intel’s US GDP Impact, 2008 – 2012
(In billions of dollars)
[Direct impact and indirect/induced impacts due to operations, capital investment, and distribution]
$120
$100
$80
$60
$40
$20
$0
2008
Direct
2009
Operational
2010
Capital Investment
Source: PwC calculations using the IMPLAN modeling system.
13
2011
Distribution Channel
2012
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Case Study: Intel’s Fabrication Site in Hillsboro,
Oregon
Intel provides the Oregon region with approximately 16,400 direct jobs, making it the state’s largest private employer.
For perspective, Intel represents approximately 20% of tech employment in Oregon which has more than 5,300 tech
companies employing a total of 81,632 tech industry professionals.
Intel also compares favorably with respect to employee salaries and Oregon’s standard of living. The average annual
salary of tech sector employees in Oregon was $94,200 in 2012, or 123 percent higher than other private sector
employment within Oregon.
“Intel’s average wage is approximately $125,000 here in the Portland metro area, while average per capita income is
$41,000.”
President and CEO of the largest business advocacy organization in Oregon
Intel is the largest taxpayer in Washington County, contributing $20.8 million in taxes to the County in 2012. Oregon
does not have a sales tax; therefore, its excise tax (i.e., the tax for the privilege of doing business in the state) is the
primary revenue source for the state along with property and employment taxes. Tax revenues serve to fund, for example,
public safety employees, public school employees, government officials and staff, and state economic development
initiatives. As a result, tax contributions provide an employment impact beyond Intel’s direct workers.
“[As] the largest [employer] in the state...Intel has a huge impact from a state-wide perspective.”
President of a local Oregon Chamber of Commerce
Intel’s total capital investment in the state has exceeded $25 billion since the company acquired its first piece of property
in Oregon in 1974. A senior member of the Oregon Building Trades and Portland Development Commission recently
remarked that the construction jobs that Intel provides have a ripple effect on the economy in numerous areas including,
for example, construction workers paying mortgages, going out to dinner, and making other purchases.
“All of the construction jobs related to Intel’s new fabrication sites put the construction industry back to work in the
state [Oregon].”
President and CEO of the largest business advocacy organization in Oregon
“Through some of our darkest times during the technology bust in 1999-2000, Intel had cranes in the air doing
construction. Intel makes a difference and is stable in our economy.”
President of a local Oregon Chamber of Commerce
“Intel is the single most
important economic factor in
Oregon today...they bring
workers from world-wide
over to here.”
“No one is as big and as
comprehensive as Intel.”
“If you took Intel out of
Oregon, we would be in
trouble.”
-
President and CEO of the
largest business advocacy
organization in Oregon
14
Intel’s Economic Impacts on the US Economy, 2008 – 2012
The results for each year are summarized in Table 5. The total economic impact of
Intel in terms of jobs and labor income (including wages and salaries and benefits as
well as proprietors’ income) grew steadily throughout the period. The total economic
impact in terms of GDP in nominal terms grew at an average rate of 6 percent per year
from 2008 through 2012 despite a contraction in 2009.
Table 5.− Intel’s Direct, Operational, Capital Investment, and Distribution
Channel Impacts on the US Economy, 2008-2012
(Dollar amounts in millions of current dollars)
Item
Direct
Impacts
Employment1
Labor Income2
GDP
44,800
$6,700
$23,951
Employment
Labor Income
GDP
44,500
$6,854
$22,801
Employment
Labor Income
GDP
44,100
$7,743
$22,939
Employment
Labor Income
GDP
50,100
$8,859
$25,001
Employment
Labor Income
GDP
53,200
$9,283
$26,044
Indirect and Induced Impacts
Downstream
Upstream Impacts
Impact
Operational
Capital
Distribution
Impacts
Investment
Channel
Impacts
Impacts
2008
408,900
32,900
95,000
$23,142
$1,948
$5,538
$38,660
$2,881
$9,483
2009
405,900
38,500
95,600
$22,727
$2,277
$5,683
$37,592
$3,347
$9,694
2010
415,500
44,600
96,700
$23,762
$2,690
$5,837
$39,333
$3,960
$9,964
2011
463,600
90,700
104,500
$26,925
$5,403
$6,316
$44,462
$7,846
$10,767
2012
496,300
110,000
115,100
$29,399
$6,478
$7,065
$48,442
$9,278
$12,038
Total
Impacts
581,600
$37,328
$74,974
585,500
$37,541
$73,434
600,900
$40,032
$76,196
708,900
$47,503
$88,075
774,600
$52,226
$95,802
Source: Intel data on direct labor income and PwC calculations using the IMPLAN modeling system.
Note: Details may not add to totals due to rounding.
1 Direct employment is defined as the number of full- and part-time jobs. Indirect and induced employment includes
payroll employment and self-employment.
2 Direct labor income is defined as wages and salaries and benefits. Indirect and induced labor income includes wages
and salaries, benefits, and proprietors’ income.
15
Intel’s Economic Impacts on the US Economy, 2008 – 2012
IV. Intel’s Economic Impact by Sector
Key Findings:


Intel Corporation and its wholly-owned subsidiaries have a widespread economic impact
throughout all sectors of the economy.
In 2012, the service sector accounted for the largest number of indirect and induced jobs
attributable to Intel’s spending, followed by wholesale and retail trade, and finance,
insurance, real estate, rental and leasing.
Intel purchases intermediate inputs from a variety of other US industries, supporting
jobs in these industries and spurring additional rounds of input purchases by these
industries. Other economic impacts are generated by the personal spending of Intel
employees and out of the additional income earned by employees in the supply chain to
Intel. The jobs, labor income (including wages and salaries and benefits as well as
proprietors’ income), and GDP supported by this cycle of spending, or multiplier
process, are referred to as the indirect and induced economic impacts.
Intel also purchases capital goods from a variety of US suppliers, which has a similar
multiplier effect on the rest of the US economy.
Table 6 shows Intel’s indirect and induced economic impacts by receiving sectors. PwC
estimates that at the national level, each direct job at Intel supported more than 13 jobs
elsewhere in the US economy in 2012. That is, in addition to the 53,200 jobs directly
provided by Intel, 721,400 additional jobs were supported in the US economy through
the indirect and induced impacts of Intel. Intel’s purchase of intermediate inputs from
other US suppliers supported 496,300 indirect and induced jobs in other industries
across the country in 2012. Intel’s capital investment supported 110,000 additional
indirect and induced jobs across the US economy and Intel’s distribution channel
supported another 115,100 jobs. Combined, Intel directly or indirectly supported
774,600 jobs in the US economy in 2012. The service sector, being the largest sector in
the US economy, accounted for the largest number of indirect and induced jobs
attributable to Intel’s spending (324,400) in 2012, followed by Wholesale and Retail
Trade (135,700), Finance, Insurance, Real Estate, Rental and Leasing (65,000),
Manufacturing (61,000), and Construction (45,300).
PwC estimates that in 2012 the $9.3 billion in employee compensation directly paid out
by Intel led to an additional $42.9 billion in labor income in the US economy – a
multiplier effect of 4.6. In addition, Intel’s direct GDP contribution of $26.0 billion in
2012 resulted in an additional $69.8 billion of GDP to the US economy – a multiplier
effect of 2.7. Detailed impact results by sector for the 2008-2012 period are presented
in Appendix B.
16
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table 6.− Intel’s Indirect and Induced Impacts on the US Economy, by Receiving Industry, 2012
Sector Description
Agriculture
Mining
Utilities
Construction
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ices
Other
Total Indirect and Induced Im pacts
Em ploy m ent*
Labor Incom e ($ m illion)**
Indirect
1 ,200
3,1 00
1 ,900
41 ,500
45,600
7 1 ,300
20,600
8,900
1 9,200
1 60,300
1 7 ,7 00
Induced
6,900
1 ,7 00
1 ,300
3,800
1 5,400
64,400
9,600
6,000
45,800
1 64,1 00
1 1 ,1 00
391,300
330,100
Source: PwC calculations using the IMPLAN modeling system.
* Employment is defined as the number of full- and part-time jobs, including self-employment.
** Labor income is defined as wages and salaries and benefits and proprietors' income.
17
Indirect
$37
$232
$248
$2,31 9
$3,820
$5,327
$1 ,1 09
$999
$1 ,1 51
$1 0,258
$1 ,408
$26,906
Induced
$21 4
$1 30
$1 69
$21 6
$1 ,065
$2,544
$531
$557
$2,1 87
$7 ,543
$880
$16,037
GDP ($ m illion)
Indirect
$55
$682
$899
$2,480
$7 ,454
$9,21 2
$1 ,494
$1 ,668
$3,325
$1 2,661
$1 ,600
$41,531
Induced
$327
$386
$61 3
$248
$2,1 7 1
$4,1 58
$7 22
$1 ,1 61
$8,27 0
$9,1 7 6
$995
$28,227
Intel’s Economic Impacts on the US Economy, 2008 – 2012
V.
Intel’s Products and Services Impacts
Key Findings:



Users of Intel's products and services benefit from productivity enhancements and cost
reductions.
Intel’s products and services contribute to the growth of productivity and GDP through
two channels: total factor productivity and capital deepening.
Through these two channels, Intel’s products and services contributed $54.8 billion in
GDP to the US economy over the 2007-2011 period.
This section first reviews the economic literature on the impact of the Information and
Communications Technology (“ICT”) sector on US economic growth and then estimates
Intel’s share of the overall contribution of the ICT sector.
Contribution of the ICT Sector to US Economic Growth – Literature Review
The ICT sector’s economic impacts include improved labor productivity, lower prices,
and faster economic growth. Moore’s Law, named after Intel co-founder Gordon Moore,
states that the number of transistors on integrated circuits doubles approximately every
two years. The capabilities of computers and other semiconductor-dependent devices
are strongly linked to Moore’s Law. Computing power, processing speeds, and memory
capacity have all increased exponentially. From the early 1970s to 2000, the power of
microprocessors increased by a factor of 7,000 while the cost of storing one megabit of
data fell from more than $5,000 to just 17 cents.8 A large body of economics research
finds that the ICT sector has fueled technological change and productivity growth across
all sectors of the economy.
In general, companies increase productivity through three channels:
1. Capital deepening: Increased investment in capital equipment (including
computers and other information technology) allows workers to be more efficient
and more productive.
2. Improved labor quality: Investments in “human capital” through training
and investments in education increase worker productivity.
3. Total factor productivity: Increases in productivity achieved through
technological progress and innovations in business systems or organizational
structure.
Rauch, Jonathan, “The New Old Economy: Oil, Computers, and the Reinvention of the Earth,” The
Atlantic Monthly, January 2001.
8
18
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Case Study: Selected Intel R&D Facilities
Intel’s Arizona operations are spread across two large sites in the City of Chandler. Roughly half of Intel’s 11,000 employee base
in the state works at the 700-acre Ocotillo campus which is dedicated to manufacturing the company’s latest silicon technology.
The remaining employees are located at Intel’s 150-acre Chandler campus where a substantial portion of employees are dedicated
to research and development. In fact, Intel has invested more than $300 million to build a new research and development facility
at this site. The facility, which is nearing completion, will be used to expand Intel’s packaging operations. The innovation that
will occur in this facility is aimed at influencing technology trends for years to come. This investment is creating several hundred
Intel R&D-related jobs and nearly a thousand construction jobs. Intel’s Arizona employees, on average, earn over $130,000 per
year (including total compensation, benefits and bonuses).
Intel’s Massachusetts Design Center in Hudson, Massachusetts is home to more than 825 engineers engaged in
microprocessor design, testing and validation for the development of next generation multi-core Itanium® and Xeon®
microprocessors for high-end servers. Lab facilities, technical staff, and engineers work directly with product design teams on
first silicon readiness to support the introduction of new high performance products before they are released for high volume
manufacturing. Labs are staffed by a cross-functional team of content developers, debug engineers, software engineers,
technicians and inventory control specialists, working closely with design and validation engineering working on first silicon to
volume validation to deliver production ready quality products.
In Intel’s New Hampshire R&D and production facility, a group of 60 Intel research and development employees researches
methods to make it easier to perform parallel programming on Intel processing cores while maximizing application performance.
Parallel programming by definition is aimed at compartmentalizing complex problems into smaller, more manageable problems
and computing solutions simultaneously. The site manager of the New Hampshire Intel facility described the importance of the
work being performed as, “enabling the technology created by Intel, meaning, without them, the development community would
not be able to “unlock” the potential and performance of the newer multi-core processors developed at Intel.” The programming
language, prototypes and tools developed here allow end-users of Intel’s silicon to better understand and utilize the capabilities of
the products. Intel’s R&D at this facility is aimed at faster computing, higher efficiency, and ease of technology use for more
applications.
In the Columbia, South Carolina facility, approximately 310 Intel engineers test Intel’s products to verify the alreadydesigned product’s features work as advertised and meet stated specifications. It is considered the “last step” before the
completed piece of research and development becomes commercialized. The site manager of the South Carolina design center
stated, “All of our validation activities have successfully yielded commercialized products in the XeonTM and CoreTM product lines;
for example, XeonTM E5 is a recent product predominantly supporting Cloud and Data Center programs validated at the South
Carolina facility and the highly successful 4th Generation CoreTM graphics system was also validated here.” When asked about the
effects of the research and development site on the local economy, the site manager responded, “Salaries for this site are notably
higher than the comparative geography and our employees enjoy a generally higher standard of living…The South Carolina
Commerce Secretary’s office tells us our gross salary of $26 million has a compounded effect of nearly three times [$76 million]
on the local economy.”
In Intel’s Eau Claire, Wisconsin lab, a group of 60 Intel employees are defining, designing, validating, and testing components
into which fabric connects. Fabric is high-speed interface that connects elements of a computing system and a key technology for
supercomputing. Fiber cables act like the network connection on a computer, allowing the user to send and receive data. Data
transfers through fiber 25 billion times per second, allowing for faster sending and receiving of information than ever before.
Fiber cables play a key role in high performance computing, which improves our economy, safety, and fundamental knowledge.
This technology helps oil companies reduce wasted effort by accurately identifying and locating oil reserves, improves the
accuracy of weather predictions allowing for accelerated warning systems, and allows for intricate simulations of real-world
catastrophes to predict impact and provide planning tools for disaster relief efforts. The Wisconsin team has grown by 20 percent
in the past year and is expected to continue to grow.
In Fort Collins, Colorado, approximately 425 Intel employees design data center applications and solutions including the
XeonTM and ItaniumTM architectures. The Fort Collins R&D center is responsible for the architecture, design, and development of
high-performance server microprocessors for server and workstation applications. The site collaborates with universities by
participating in programs to grow awareness of and support professorships in Science, Technology, Engineering and
Mathematics (“STEM”) careers. In addition, the site participates on external boards and conference committees to support
women and minorities in STEM. The design center also impacts its community through environmental initiatives such as
recycling (68,000 lbs in 2011), reducing onsite energy and gas consumption (by an amount that is equivalent to the annual energy
and gas onsumption by 250 average American households), and improving eco-friendly options for worker transportation by
implementing and incentivizing a “bike to work” program. This group also is noteworthy because it is the largest per employee
donor to the United Way in the country with an average gift size per donor at $3,500.
19
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Capital deepening. According to the US Bureau of Economic Analysis, nominal
business investment in information processing equipment and software grew at an
average annual rate of 8.8 percent between 1970 and 2012, 1.7 percentage points faster
than the overall rate of growth of investment in all nonresidential capital equipment and
software. Due to technological advancements and declining real costs of information
processing equipment and software relative to other types of equipment, real
investment in information processing equipment and software grew more than twice as
fast as investment in other nonresidential capital equipment. By 2012, information
processing equipment and software accounted for 55.4 percent of investment in
nonresidential equipment and software and 31.0 percent of the total net stock of
nonresidential equipment and software in the United States (Table 7).
Table 7. -- Average Share of Information Processing
Equipment and Software in Total Nonresidential
Investment in Equipment and Software
60%
50%
50.3%
2000-09
2010-12
45.4%
38.8%
40%
30%
50.4%
25.3%
20%
10%
0%
1970-79
1980-89
1990-99
Note: Annual investment measured in nominal dollars.
Source: US Bureau of Economic Analysis, Fixed Asset Accounts, Table 2.7.
Total factor productivity (“TFP”). TFP (also known as multifactor productivity)
accounts for changes in productivity not directly attributable to capital or labor. TFP
generally results from technological improvements as well as changes in business
organizational structures or processes that allow companies to better utilize new or
existing technologies. Intel and the larger ICT industry have been a significant source of
TFP in the United States. The contribution of computers and electronics manufacturing
to overall US total factor productivity increased significantly in the 1990s before leveling
off in recent years (see Table 8). According to data from the US Bureau of Labor
20
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Statistics, computers and electronics manufacturing accounted for 0.46 percentage
points of the 0.92 percentage point increase in annual private nonfarm business TFP
over the 1987 to 2011 period. In other words, computers and electronics manufacturing
accounted for approximately half of the TFP growth in the private nonfarm business
sector over this 25-year period.
Table 8. -- Contribution of Computers and Electronics
Manufacturing to Private Nonfarm Business Total
Factor Productivity Growth, 1987-2011
[Percentage points]
1.6
1.4
Computers and Electronics
Private Nonfarm Business TFP
1.40
1.34
1.2
1.0
0.92
0.85
0.8
0.6
0.4
0.48
0.510.48
0.44
0.46
0.36
0.30
0.22
0.2
0.0
1987-90
1990-95
1995-00
2000-07
2007-11
1987-11
Source: US Bureau of Labor Statistics, Contributions of Manufacturing Industries to Private
Nonfarm Business Multifactor Productivity, June 19, 2013.
The benefits of productivity growth take many forms. The most immediate benefit is
that labor can produce more output for a given hour of work. Firms that utilize new
forms of technology are able to produce the same number of goods or services of
equivalent quality at lower costs given the same number of inputs. Productivity gains
are shared by consumers, workers, and shareholders in the form of lower prices, higher
wages, and higher returns on investment. Longer-term effects include higher levels of
ICT investment and the development of a labor force with the skills required to utilize
ICT in the workplace.
Although the impact of technological progress on productivity gains is difficult to assess,
the general consensus among economists has centered around the following
observations and trends (see Appendix C):
21
Intel’s Economic Impacts on the US Economy, 2008 – 2012
1. The decline in prices of ICT hardware,
2. Growth of employment in ICT-intensive businesses compared to growth in
employment in non-ICT intensity businesses,
3. The ICT industry’s positive contribution to economic growth since the early
1990s, and
4. Positive "spillover" effects in relation to firms' proximity and access to ICT
investment.
Prices
Data provided by the Bureau of Labor Statistics indicates that prices for information
technology hardware and software fell by more than 67 percent during the 1990s.9
Between 1994 and 2001, the price of semiconductors dropped by 47.1 percent compared
to a decline of 18.6 percent between 1988 and 1994 (Aizcorbe, Oliner and Sichel,
2006).10 In 1998 alone, the end-use price for computers fell by 40.3 percent with the
decline in semiconductors prices accounting for 40 to 60 percent of the decline
(Aizcorbe, Flamm and Khurshid, 2001).11
Technological change in the semiconductor manufacturing industry was the main driver
of the observed decline in ICT prices (Mann, 2003). The manufacture of dynamic
random access memory (DRAMs) and personal computers (PC) both experienced
significant price declines during the 1990s. Cheaper semiconductors explained about
half of the decline in PC prices (Mann, 2003). Microprocessor unit (MPU) chips also
followed an overall trend in price decline, accelerating in the mid-90s and slowing after
2001. During this period Intel was the dominant producer of MPU chips (Aizcorbe,
Oliner and Sichel, 2006).
While technological progress in the ICT-producing industry was the main driver of the
decline in ICT prices during the 1990s, globalized production contributed to addition
price declines, which allowed for the diffusion of ICT hardware throughout the
economy. Globalized production and international trade accounted for 10 to 30 percent
tradeoff of the decline in ICT hardware prices over this period (Mann, 2003). For
example, regression analysis has found that an increase in net imports of PCs is
associated with a reduction in PC prices. As the global capacity to produce dynamic
random access memory (DRAMs) hardware increased relative to actual production, the
decline in prices accelerated (Mann, 2003). As a result of the lower prices, ICT
hardware was more easily diffused throughout the economy. This diffusion was the
result of two related effects. First, technological advances in semiconductors resulted in
continuing price declines for a given level of performance. These price reductions
increased demand for intermediate inputs in industries that use semiconductors, such
as computer and communications equipment manufacturing. Second, the price of
output in semiconductor-using industries was lower, increasing the quantity demanded
PwC calculation using the consumer price index for all urban consumers for information technology
hardware and services.
10 The decline in semiconductor prices slowed between 2001 and 2004, declining by 28.2 percent.
11 The largest end users of semiconductor chips in 1999 were computer manufacturers, making up half of
the value of worldwide shipments; the next largest end users were communications equipment (21
percent) and consumer electronics (14 percent) manufacturers (Aizcorbe, Flamm and Khurshid, 2001).
9
22
Intel’s Economic Impacts on the US Economy, 2008 – 2012
by other industries for products like computers and telecommunications equipment
(Jorgenson, Ho and Stiroh, 2002).
Firms that purchased and incorporated ICT inputs into their production processes
provided indirect contributions to economic growth. Declines in the price of ICT inputs
helped slow price inflation across the economy and allowed policymakers to maintain
lower interest rates over a longer timeframe (Mann 2003). From the standpoint of the
final consumer, technological improvements that reduced the cost of microprocessors
and PCs result in direct gains in the form of increased consumer surplus. For other
businesses, these technological improvements mean cheaper inputs and changes in
production processes that provide further indirect benefits to the economy in the form
of lower output prices form non-ICT products to the final consumer. This indirect
contribution is known as “social surplus.” From 2000 to 2007, the social surplus
associated with the declining prices of ICT hardware and software was about 4 percent
of real GDP or about $500 billion. This increase in GDP was the result of declining
prices of ICT, which resulted in new business startups and the diffusion of new business
processes and practices (Mann 2012).12
Employment
During the 1990s, wholesale trade, securities and commodity brokers, depository
institutions, and telecommunications all had relatively higher levels of information
technology. These sectors also experienced higher contributions to GDP growth relative
to other sectors in the economy (Mann, 2003). While the intensity of ICT technology
increased by an average of 150 percent during the 2000s, the diffusion of ICT
technology was not equally distributed across all industries. In fact, there was a
widening dispersion in ICT-intensity among sectors within the US economy (Mann,
2012).
The difference in relative ICT-intensity among industries had varying impacts on
employment. ICT producers, which made up about 3 percent of total employment,
continued to add jobs over the 2001-2009 period. Employment in ICT-intensive service
establishments grew by 5 percent during this period, adding about 1 million jobs to the
US economy. In contrast, non-ICT intensive services, which accounted for about two
thirds of total employment, only grew by 1.5 percent over the same period (Mann, 2012).
ICT-intensive manufacturing establishments expanded and contracted with the business
cycle relatively more closely than non-ICT intensive manufacturing. Over the 20012009 period, employment in ICT-intensive manufacturing establishments declined by
34 percent compared to a decline of 17 percent in non-ICT intensive manufacturing
establishments (Mann, 2012). Although small ICT-intensive services made up just 5 to
6 percent of overall employment in the United States, these establishments accounted
for a much higher share of overall net job creation, ranging from 13 percent in 2003 to
68 percent in 2008 (Mann, 2012).
ICT hardware price declines contributed the most to social surplus. Although software prices did not
decline as quickly, their rate-of-return was greater than hardware. Expenditures on software and ICT
services are also much greater than expenditures on hardware (Mann, 2012).
12
23
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Case Study: Intel’s Education Collaboration
Intel supports technology education of Texas students in a number of ways so that they can be better prepared for the ICT
workforce of tomorrow. Since 2000, 28,500 Texas teachers have completed the Intel Teach Program, which is designed as a
worldwide professional development program, aimed at giving teachers the tools to integrate technology into their teaching
curriculum. In addition, Intel has sponsored 100 paid interns from the University of Texas. These interns are integrated into
the Texas research and development site and can further study and generate interest in research and development in the
community and at universities.
Intel interacts with the education community through various outreach programs, direct donations, and volunteer hours. A
Director from the University of Texas explained, “…the tech sector is a busy place right now with a lot going on. From a
student perspective it helps to attract interest.” Intel has invested in a variety of University programs to foster the kind of
experience they can leverage to continue with their education and in employment with sophisticated technology firms such as
Intel. The company has also been a long-time funder of diversity programs and has “changed the conversation at a local and
national level.”
“Intel’s commitment has made it possible to grow programs and grow staff. We have gone from 4 to 42 programs, 60 to
1000 girls, and our 8-week program has expanded from 250 girls to more than 500 girls.”
Executive Director of an Austin non-profit organization
Intel provides direct capital dollars, access to resources, and numerous volunteers. The Executive Director of a local non-profit
said, “Intel shows up when they say they will show up. It’s not just lip service.” Intel received high marks from a Senior
Director at a local education organization, “I would give Intel high marks in volunteering…they are doing a good job recently
on community involvement…and they are very consistent, not doing things as one-offs, but having conversations about the
whole year and looking for opportunities to invest and grow.”
“I can easily say that Intel has had the most strategic view and execution of their core university partnerships of any
company with which I’ve worked.”
Senior Director of Research Relations at a large university in Texas
Structure of Labor Force
ICT-intensive firms require a workforce adept at implementing and operating new
technologies. Growth in ICT investment at the end of the 20th century was coupled with
a more educated workforce. The structure of the US labor force has increasingly seen a
shift toward college-educated workers, who are often identified as “knowledge workers”
that “make use of information technology equipment and software.” Between 1977 and
2007, the college-educated labor force grew at an average annual rate of 3.8 percent
compared to 1.3 percent for the non-college educated labor input (Jorgenson, Ho and
Stiroh, 2002). The college-educated workforce had a higher contribution to the GDP
growth than non-college educated labor. Overall, labor inputs accounted for 1.19
percentage points of the 3.08 percent average annual GDP growth between 1977 and
2000. The contribution of college-educated workers during the same period was 0.72
percentage points compared to 0.48 percentage points for non-college educated workers
(Jorgenson, Ho and Stiroh, 2002).
Economic Growth
The ICT sector's most significant economic impact is a result of the rapid expansion in
the production of microprocessors, computers, and other electronic devices that began
in the 1990s. The contribution of ICT production to output almost doubled during the
early 1990s and accounted for 28.9 percent of growth in output between 1990 and 1995.
By the latter half of the decade, ICT capital services made up half of the capital input
24
Intel’s Economic Impacts on the US Economy, 2008 – 2012
contribution (Jorgenson, 2001). ICT equipment and software played an important role
in the acceleration of productivity growth over the 1995 to 2003 period (Corrado,
Hulton, and Sichel, 2009). Output per hour in the private nonfarm business sector grew
at an average annual rate of 2.95 percent between 1995 and 2003 compared to 1.47
percent between 1973 and 1995, an increase of 1.48 percentage points. Corrado, Hulton
and Sichel found that 0.53 percentage points (or 36 percent) of this increase was due to
capital deepening in the form of ICT equipment and software. Another 0.85 percentage
points was accounted for by growth in total factor productivity, with the remainder
accounted for by changes in the composition of labor.13 As discussed below, the
computer and electronics manufacturing sector plays an important role in the TFP
growth. In fact, between 1995 and 2000, this industry accounted for more than 60% of
the TFP growth in the private nonfarm business sector.14
Beginning in the 1990s, ICT hardware laid the groundwork for increased economic
productivity and economic growth. According to the Bureau of Labor Statistics,
between 1987 and 2011 the computer and electronics manufacturing industry
contributed 50 percent of private nonfarm business TFP growth (0.46 percentage points
out of the 0.92 percentage point average annual TFP growth). Over the same period,
output per hour for all private non-farm businesses grew at an average annual rate of
2.2 percent. In other words, computer and electronics manufacturing accounted for
approximately 21 percent of the increase in output per worker over this period.15
Productivity gains related to a rapid price decline of ICT hardware resulted in
approximately $230 billion of additional GDP growth between 1995 and 2002 (Mann,
2003). The direct and indirect gains in economic growth related to lower ICT prices and
increased ICT-intensity amounted to an economic gain between $810 billion and $935
billion from the 2002-2007 period. After including ICT-services (such as computer
design), the overall gain is closer to $1 trillion given the broad use of ICT hardware,
software, and services across all industries in the US economy (Mann, 2012). Lower ICT
prices supported additional investment in ICT capital which translated into productivity
growth and higher growth in GDP (Mann, 2003).
Spillover Effects
Geographical proximity to pools of ICT investment results in positive "spillover" effects.
Recent research looked at 4-digit SIC level industries within the Northern California
region (a highly ICT-intensive region) compared to other regions. Firms with easy
access to ICT capital had more flexibility in production. The increased specialization of
technology firms within close proximity of each other allows non-ICT establishments to
take advantage of their resources to ramp up or slow down production with more ease.
For example, the output elasticity of ICT investment (i.e., the change in production with
respect to a change in ICT investment) for non-durable goods manufactured in
See Table 6 in Corrado, Hulton and Sichel, 2009.
US Bureau of Labor Statistics, “Contributions of Manufacturing Industries to Private Nonfarm Business
Multifactor Productivity,” June 19, 2013.
15 PwC calculations based on data from US Bureau of Labor Statistics, “Contributions of Manufacturing
Industries to Private Nonfarm Business Multifactor Productivity,” June 19, 2013 and “Multifactor
Productivity Trends – 2011,” April 9, 2013.
13
14
25
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Northern California was 5 percent higher than firms in the same industry outside the
region (Tambe and Hitt, 2010). Firms with relatively more access to outside sources of
ICT investment were better equipped to utilize new production methods and practices.
The relatively higher elasticity in supply also suggests that firms with access to other
highly ICT-intensive firms are more flexible in response to market changes.
Conclusion
The ICT sector boosts productivity through various channels. The rapid decline in ICT
hardware prices between 1995 and 2002 contributed to $230 billion in GDP growth.
The combination of ICT hardware and services contributed to an additional $1 trillion in
GDP growth between 2002 and 2007. The total contribution of the ICT industry to
overall economic growth over the 1995-2007 period was approximately $1.3 trillion
(Mann, 2003 and Mann, 2012). Investment in ICT capital was coupled with a highlyeducated workforce. As a result of the change in the structure of labor force, the real
growth rate in labor productivity during the 2000s was 10 to 20 percent higher relative
to its baseline from 1995 to 2003 (Corrado, Hulten and Sichel, 2009). Spillover effects
related to the proximity of other ICT-intensive firms are associated with higher output
per given amount of capital input.
Intel’s Contribution to US Economic Growth
Intel operates in the larger ICT sector by designing and manufacturing microprocessors,
motherboard chipsets, integrated circuits, and other similar products. Microprocessors
represent the largest segment of Intel’s business, accounting for an estimated 76 percent
of the company’s revenue in 2012. Intel is the world’s largest supplier of
semiconductors in terms of sales, with a global market share of approximately 15.7
percent.16 The microprocessors that Intel produces are components of computers and
many other commonly used electronic devices. As electronic devices become more
efficient (e.g., increased computing power, higher-resolution graphics, etc.), so does the
productivity of the households and firms that use them.
As with the ICT sector as a whole, Intel’s products and services contribute to economic
growth both through their impact on total factor productivity and through their
contribution to capital deepening.
Total factor productivity. According to the US Bureau of Labor Statistics, the
growth in total factor productivity (also called “multifactor productivity”) accounted
for 0.4 percentage points of the 1.9 percent annual average increase in the private
nonfarm business sector’s real output over the most recent five-year period for which
data are available (2007 to 2011). The remaining 1.5 percentage points are due to the
combined contribution of capital and labor.17 BLS data show that the Computer and
IHS iSuppli Research, December 2012.
BLS, Multifactor Productivity Trends - 2011, Table B (http://www.bls.gov/mfp/mprdload.htm).
Weighting is necessary in order for the individual factor growth rates to sum to the overall growth of
private nonfarm business sector output.
16
17
26
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Electronics Manufacturing sector (NAICS 334) accounted for half of the TFP growth
in the private nonfarm business sector between 2007 and 2011.18 Given that Intel’s
output accounted for approximately 8.5 percent of output in the Computer and
Electronics Manufacturing sector during this period, we estimate that Intel’s
contribution to nonfarm private business TFP growth averaged 4.2 percent (8.5
percent of 50 percent). Thus, through the TFP impact, Intel’s products and services
contributed 0.02 percentage points to the private nonfarm business sector’s real
GDP growth over the 2007 to 2011 period (4.2 percent of 0.4 percent). This
amounts to $9.0 billion of real GDP between 2007 and 2011 (measured in 2005
dollars), or $10.2 billion nominal GDP (measured in current dollars). In other
words, Intel’s products and services contributed an average of $2.o billion of
nominal GDP per year in this 5-year period due to its impact on total factor
productivity.
Capital deepening. Intel also contributes to GDP growth through increased
investment in information processing capital by other sectors of the economy (i.e.,
capital deepening). Capital services contributed 1.1 percentage points out of the 1.9
percentage increase in the private nonfarm business sector’s real GDP between 2007
and 2011. Using data from the US Bureau of Labor Statistics, we estimate that
computers and related equipment accounted for approximately one-half of one
percentage point of the increase in the private nonfarm business sector’s real GDP
between 2007 and 2011 (or $51.4 billion).19 Intel's global market share of
microprocessors was 80 percent in 2011.20 Assuming that roughly 80 percent of
computers in the United States use an Intel microprocessor, we estimate that Intel's
contribution to real GDP growth through capital deepening was $41.1 billion over
the 2007 and 2011 period (measured in 2005 dollars), or $44.6 billion in nominal
GDP (measured in current dollars).21 In other words, Intel’s products and services
contributed to an average of $8.9 billion of nominal GDP per year through capital
deepening in this 5-year period.
Bureau of Labor Statistics, Multifactor Productivity Trends in Manufacturing, 2011. The contribution
of the computers and electronics manufacturing sector to TFP was 0.22 during the period of 2007-2011.
The contribution of private nonfarm business to TFP was 0.44 for the same period. The computers and
electronics manufacturing sector therefore contributed half of private nonfarm business TFP growth.
19 BLS, Multifactor Productivity Trends- 2011, Table 5. Various asset shares can be found in the MFP
comprehensive tables, "Capital and Information Capital Measure by Asset Type,"
http://bls.gov/mfp/mprdload.htm
20 Statista, Microprocessor Market Share Worldwide 2009-2011.
21 This analysis implicitly assigns all of the value of a personal computer with an Intel chip to Intel and
excludes the value of Intel’s chips used in other types of communications and electronic equipment.
18
27
Intel’s Economic Impacts on the US Economy, 2008 – 2012
As shown in Table 9,22 the contribution to GDP of Intel's products and services through
total factor productivity growth and capital deepening over the 2007-2011 period was
estimated to be $54.8 billion in nominal terms, or approximately $11.0 billion per year.
Table 9 – Contribution of Intel's Products and Services to US Economic
Growth, 2007-2011
$10.2 billion
Contribution to TFP
Contribution due to Capital
Deepening
$44.6 billion
Total Contribution = $54.8 billion
Source: PwC calculations based on data from IMPLAN and the Bureau of Labor Statistics.
BLS, Multifactor Productivity Trends – 2011, Statista, and PwC Calculations. GDP price deflators
converting real to nominal growth are from Appendix B of the 2013 Economic Report of the President.
22
28
Intel’s Economic Impacts on the US Economy, 2008 – 2012
VI: Case Studies
In addition to the significant economic impact generated from operations and capital
investments at locations with large Intel manufacturing facilities in Oregon, Arizona and
New Mexico, there are other impacts related to job creation and talent growth,
innovation, industry leadership, supplier benefits and clustering impacts. To
qualitatively assess Intel’s impacts on the US national and local economies, PwC and
Intel jointly identified three themes that would be the focus of three field-level case
studies of Intel’s operations and investments in the United States.23
In creating the case studies PwC utilized the following approach:

First, PwC created a strategy and plan to assess Intel’s impact. We incorporated
existing known information supplemented with research and a structured
stakeholder analysis that leveraged input and guidance from internal Intel
sources, suppliers, consumers, laborers, colleges, community programs, and
governmental policy makers.

Next, PwC focused its efforts on conducting face-to-face interviews with key
stakeholders as they were identified within both the direct value chain and
indirect channels using structured interviews. While the interviewing team
followed scripted questions, in order to obtain rich qualitative insights from the
respondents, the team pursued additional lines of questioning and themes when
interesting issues arose as part of the conversation.

Finally, upon completion of research, interviews, and analysis, the PwC team
developed a comprehensive economic overview which is outlined herein.
Quotes from some of these respondents are included in the highlights below.
1. Research and Development (“R&D”) – In 2012 Intel’s global R&D spending
was $10.1 billion, with a five-year R&D spend of over $36.5 billion. US-based
R&D spending accounted for the majority of the total global spend in 2012. In a
2013 survey conducted by Booz & Co, Intel was the number one R&D spender
among publicly traded US companies in all sectors. Interview respondents called
Intel’s R&D efforts in the United States “rich with innovation” and “industryleading,” pointing to years of being on the “leading-edge of development” and
“bringing forward technology that matters.”
2. Supply Chain Ecosystem – Intel maintains and interacts with a vast supply
chain as both a consumer and a supplier. With $11B in global capital
expenditures (about 80% in the US) and $53.3 billion in global sales, the
company operates in the middle of a supply chain that is continuously improving
the usability and interactivity of technology. Interview respondents described
For the purposes of the Case Studies, Intel refers to Intel Corporation, excluding McAfee and Wind
River subsidiaries.
23
29
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Intel’s effects on its Oregon supply chain as “the most important economic factor
in Oregon” and that Intel “makes a difference and is stable in our economy.”
Furthermore industry veterans touted Intel as a company that “kept the
manufacturing and expertise in this country [US]” and noted that “without Intel,
the semiconductor industry would be considerably less US-centric and further
behind.”
3. Venture Capital – Since its inception in 1991, Intel Capital has invested more
than $10.8 billion in over 1,276 companies in 54 countries. Intel Capital’s
investment in the US Technology industry has been evident with $6.7 billion, or
62% of its total capital investment going to US-based companies. Furthermore,
Intel Capital’s focus on company building has resulted in over 500 acquisitions,
mergers, and IPOs. Intel Capital’s contribution to the US economy and business
environment goes beyond capital investment. As industry experts and executives
of former portfolio companies stated, Intel Capital is “among the best in knowing
the industry” and their “stamp of approval is hard to match.” Intel Capital’s
advantages are described as “longevity, experience, size, consistency, and
financial returns were among the best, if not the best of any unit.” Portfolio
companies benefit from investments and interactions that “helped us to span out
geographically and grow the sales team.”
The following pages describe the results of the individual Case Studies.
30
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Case Study 1: Research and Development
Innovations and Technology Advancements with Local,
State, National and Global Implications
Globally, Intel spent $10.1 billion on research and development (“R&D”) in 2012, the
majority of which is staffed and occurs within the United States. Intel’s R&D initiatives
are constantly expanding the technology market and creating opportunity for
improvements in efficiency, data analysis, and user-experience. Major research and
development hubs for Intel are spread across the United States including: Oregon,
Texas, Pennsylvania, Wisconsin, South Carolina, New Hampshire, Washington,
California, and Colorado. Each of these sites is designed to stay closely connected to its
technology ecosystem and each site contributes to the research and development
capabilities of Intel nationally.
Exhibit 1.1: Intel’s Worldwide Research and Development Spend (20082012)
R&D Spend by Year
10.1
11
10
8.4
USD in Billions
9
8
7
6.6
5.7
5.7
6
5
4
3
2
1
0
2008
2009
2010
2011
2012
Intel’s R&D initiatives have delivered a number of major technology advancements
including, to name a few: low-power architectures; virtualization technologies; and,
teraflops research processors. Intel is consistently an early adopter of innovative
technology, which can be seen through Intel’s equipment purchasing. An internal Intel
manufacturing equipment buyer stated, “We see a 1 to 3 year gap between the first small
wave of equipment buyers, mainly Intel, and the second large wave of equipment
buyers…the gap is mainly a function of Intel’s technology growing faster than the
competition.”
31
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Below are two examples of Intel’s R&D contributions, impact and leadership.
Intel recently built a development fabrication facility in Oregon that opened in 2013 and
is building a leading-edge technology, large-scale fabrication facility in Arizona. R&D
spending increased in 2012 by 22 percent over 2011, driven by increasing investments in
smartphones, tablets, Ultrabook systems, and data centers. Furthermore, R&D
spending increased with annual wage increases, higher process development costs for
Intel’s next-generation 14 nano-meter process technology, and higher costs related to
developing the 450 millimeter wafer technology.
Examples of Intel Impacts by Particular R&D Center
Geographic Locations
Intel’s Arizona operations are spread across two large sites in the City of Chandler.
Roughly half of Intel’s 11,000 employee base in the state works at the 700-acre Ocotillo
campus which is dedicated to manufacturing the company’s latest silicon technology.
The remaining employees are located at Intel’s 150-acre Chandler campus where a
substantial portion of employees are dedicated to research and development. In fact,
Intel has invested more than $300 million to build a new research and development
facility at this site. The facility, which is nearing completion, will be used to expand
Intel’s packaging operations. The innovation that will occur in this facility is aimed at
influencing technology trends for years to come. This investment is creating several
hundred Intel R&D-related jobs and nearly a thousand construction jobs. Intel’s
Arizona employees, on average, earn over $130,000 per year (including total
compensation, benefits and bonuses).
Intel’s Massachusetts Design Center in Hudson, Massachusetts is home to more
than 825 engineers engaged in microprocessor design, testing and validation for the
development of next generation multi-core Itanium® and Xeon® microprocessors for
high-end servers. Lab facilities, technical staff, and engineers work directly with
product design teams on first silicon readiness to support the introduction of new high
performance products before they are released for high volume manufacturing. Labs
are staffed by a cross-functional team of content developers, debug engineers, software
engineers, technicians and inventory control specialists, working closely with design and
validation engineering working on first silicon to volume validation to deliver
production ready quality products.
In Intel’s New Hampshire R&D and production facility, a group of 60 Intel research
and development employees researches methods to make it easier to perform parallel
programming on Intel processing cores while maximizing application performance.
Parallel programming by definition is aimed at compartmentalizing complex problems
into smaller, more manageable problems and computing solutions simultaneously. The
site manager of the New Hampshire Intel facility described the importance of the work
being performed as, “enabling the technology created by Intel, meaning, without them,
the development community would not be able to “unlock” the potential and
performance of the newer multi-core processors developed at Intel.” The programming
32
Intel’s Economic Impacts on the US Economy, 2008 – 2012
language, prototypes and tools developed here allow end-users of Intel’s silicon to better
understand and utilize the capabilities of the products. Intel’s R&D in New Hampshire
focuses on faster computing, higher efficiency, and ease of technology use for more
applications.
In Intel’s Columbia, South Carolina facility, approximately 310 Intel engineers test
Intel’s products to verify the already-designed product’s features work as advertised and
meet stated specifications. It is considered the “last step” before the completed piece of
research and development becomes commercialized. The site manager of the South
Carolina design center stated, “All of our validation activities have successfully yielded
commercialized products in the XeonTM and CoreTM product lines; for example, XeonTM
E5 is a recent product predominantly supporting Cloud and Data Center programs
validated at the South Carolina facility and the highly successful 4th Generation CoreTM
graphics system was also validated here.” When asked about the effects of the research
and development site on the local economy, the site manager responded, “Salaries for
this site are notably higher than the comparative geography and our employees enjoy a
generally higher standard of living…The South Carolina Commerce Secretary’s office
tells us our gross salary of $26 million has a compounded effect of nearly three times
[$76 million] on the local economy.”
In Intel’s Eau Claire, Wisconsin lab, a group of 60 Intel employees are defining,
designing, validating, and testing components into which fabric connects. Fabric is
high-speed interface that connects elements of a computing system and a key
technology for supercomputing. Fiber cables act like the network connection on a
computer, allowing the user to send and receive data. Data transfers through fiber 25
billion times per second, allowing for faster sending and receiving of information than
ever before. Fiber cables play a key role in high performance computing, which
improves our economy, safety, and fundamental knowledge. This technology helps oil
companies reduce wasted effort by accurately identifying and locating oil reserves,
improves the accuracy of weather predictions allowing for accelerated warning systems,
and allows for intricate simulations of real-world catastrophes to predict impact and
provide planning tools for disaster relief efforts. The Wisconsin team has grown by 20
percent in the past year and is expected to continue on its growth trajectory.
In Fort Collins, Colorado, approximately 425 Intel employees design data center
applications and solutions including the XeonTM and ItaniumTM architectures. The Fort
Collins R&D center is responsible for the architecture, design, and development of highperformance server microprocessor for server and workstation applications. The site
collaborates with universities by participating in programs to grow awareness of and
support professorships in Science, Technology, Engineering and Mathematics (“STEM”)
careers. In addition, the site participates on external boards and conference committees
to support women and minorities in STEM. The design center also impacts its
community through environmental initiatives such as recycling (68,000 lbs. in 2011),
reducing onsite energy and gas consumption (by an amount that is equivalent to the
annual energy and gas consumption by 250 average American households), and
improving the eco-friendly options for worker transportation by implementing and
incentivizing a “bike to work” program. This group also is noteworthy because it
33
Intel’s Economic Impacts on the US Economy, 2008 – 2012
benefits its community through direct community giving. Intel Fort Collins is Intel’s
number one United Way contributor in the nation by average gift size per donor at
$3,500.
Intel R&D: Case Study Interview Results
Intel’s research and development efforts contribute to the US economy in significant
ways:





Job Creation – The research and development arm of Intel Corporation is
home to high-paying and innovative employment opportunities. These jobs and
positions not only provide internal job growth, but also external job growth
through individual start-up companies, service and support positions for the
improved technology, and local small businesses through employee dollars spent.
Innovation – Intel’s research and development and further commercialization
into viable products enables large technology companies to improve upon current
performance, increase user experience, and deliver value to the economy. Intel
research plays a critical role in setting the path for the technology market.
Industry Leadership – Intel is leading current technological innovations.
According to semiconductor industry experts, “Without Intel’s contributions, the
US semiconductor industry and the US technology industry in parallel would not
be the leader it is today.”
Education Collaboration – Intel works with numerous education programs
from grade-school all the way to post-graduate and Doctoral programs. These
programs help to highlight the positive aspects of STEM careers and build the
pipeline for a healthy middle-upper class of graduates.
Community Impact – Intel’s volunteerism, community engagement, and
continuously giving nature impact the local communities in which it operates.
These programs coupled with the small business support by the employees of
Intel, are the building blocks for a strong local community.
Each of these topics is covered in greater detail below. Intel selected its Austin, Texas
design center to measure the individualized effects of an Intel research and development
site on the local community and economy.
Job Creation
Many industry experts maintain that Austin, Texas is in many ways considered a
“miniature-Silicon Valley” often referred to as “Silicon Hills,” with presence from many
large technology companies including, Dell, IBM, National Instruments, and Samsung.
Intel is a significant employer in Austin with approximately 1,300 high-paying jobs in its
R&D Center.
34
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Texas is the second largest state by population at over 26 million in 2012.24 Texas
maintains 29,380 tech establishments, employing 485,636 individuals in 2012. Tech
employees in Texas average $92,200 in annual salaries, 85 percent higher than the
average private sector wages of $49,800.25
“I can say with absolute certainty that Intel has made it possible for us to expand our
impact and hire more people to expand our programs.”
- Executive Director of an Austin non-profit organization
Intel is a crucial contributor to bringing high-paying tech jobs to the Austin area.
According to an executive member of the Austin Chamber of Commerce, “For the last 10
years our chamber has worked to revitalize the economy. A lot of effort has been about
bringing in a diverse set of jobs…” In the past 18 months, Intel has bought property,
consolidated operations, and had a successful round of hiring. These diverse jobs can
serve to improve the economy by raising standards of living, keeping the job market
viable for high-talent graduates coming out of universities like the University of Texas –
Austin and Texas State, and drawing additional talent to the region.
“They [Intel] hire a bunch of people and their kids get to go to good schools…providing
that quality of life and quality of job creates Intel’s ripple effect… [that] can be seen in
southwest Austin”
- Executive Director of an Austin non-profit organization
“Intel is a significant provider of jobs to the region.”
- Senior Director of an Austin workforce development program
Innovation
Intel works with its end-customers to collaboratively develop projects, software, and
solutions that will create and enable the technology of tomorrow. Intel is involved on an
everyday basis with representatives from some of the largest technology manufacturers
to define the technology roadmap in a collaborative and open environment. This
collaboration and innovation between component and product manufacturers increases
benefit and value to joint customers. The relationship between Intel and its customers
is described by Intel as “…one of the most multifaceted relationships in the industry.
We collaborate on products as well as software and solutions.”
“Our company and Intel have been partners for over 30 years. One of the things that
really pulled us together was the rich DNA of innovation running through both of our
companies. We have a similar set of values: Try to do our very best for our customers
every day by bringing forward technology that matters.”
- VP and GM of US Commercial Sales for a significant Intel client
24
25
http://www.dshs.state.tx.us/chs/popdat/st2012.shtm
CyberStates Report 2012.
35
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Intel is responsible for unlocking the potential power, performance and other
capabilities in the industry-leading technology that is being developed in Intel labs
around the country. This means developing programming language, testing capabilities,
and creating innovative software to interact with the technological advancements that
are driving the industry forward. A design center site manager at Intel said that “our
compilers and tools…unlock the potential of our newer, multi-core processors.”
“Intel is great at executing on new technology…they lead the industry in introducing
new technology and also independently go and coordinate the technology development
and the architectural development so that they can deliver a new architecture and
technology every year.”
- 35-year semiconductor sector veteran
Intel is responsible for some of the most useful technological research and development
advances. Intel has pioneered research on technological power consumption,
computing ability, and size of application, to name a few. Intel’s Austin, Texas research
and development center is working on a number of innovative products including,
perhaps most significantly, AtomTM processors. The AtomTM processor is a new
disruptive technology enabling a wide spectrum of products including netbooks, entrylevel desktops, tablets, smartphones, consumer electronics devices, and other
companion devices. Atom processors are ultra-low-power and are improving the
uptime of the useful technology that individual users interact with on a daily basis. In a
recent comparison, a Windows 8 tablet with Intel AtomTM processor showed the lowest
2-year cost of ownership and the highest battery-life when compared to the Apple iPad,
Android tablet and Windows RT tablet.26
Industry Leadership
Intel is described as having a position of “…leadership, ahead of all their competition…”
by a 35-year semiconductor veteran. Intel has been a leader and driver in the market
since its inception. Intel is responsible for continuous improvements in efficiency,
speed, computing power, and user experience. Intel communicates its strategic vision to
the technology community, and strives to grow the base of future employees through
educational support programs such as the Semiconductor Research Corporation and
other educational collaboration described below.
“Intel’s strategic view and coordinated actions have helped keep the United States at
the leading edge of development. Intel has helped guide the long-term direction of
research down to the University level so that it and other companies can leverage
those fundamentals 10-15 years in the future.”
- 35-year semiconductor sector veteran
Intel is driving the market forward both at the national level and in local jurisdictions
like Austin. With programs aimed at solving complex problems and performing,
innovative research at collaborative institutes including Stampede at the University of
26
http://www.principledtechnologies.com/Intel/Atom_tablet_TCO_0313.pdf
36
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Texas, Intel continues to lead the industry from an R&D strategic perspective. Intel’s
R&D initiatives are continually assessing the strategic computing and technology
roadmap to address everyday problems and engineer productive solutions. As the
Senior VP for Research and Reports at a nationwide technology advocacy group
commented, “Intel has been very active in education and encouraging STEM fields.
These are long-term views that allow Intel to create industry clusters to support their
goals.”
“Without Intel, the semiconductor industry would be considerably less US-centric and
further behind. If it weren’t for Intel, the US wouldn’t have nearly the influence and
presence it has in the semiconductor industry today. When companies were moving
overseas in the 1980s and 1990s, Intel kept the manufacturing and expertise in this
country and we are still the leaders worldwide.”
- 35-year semiconductor sector veteran
Education Collaboration
Intel understands that without acceptable candidates to fill positions, technology
businesses cannot grow, innovate, and sustain themselves. The research and
development of tomorrow will be performed and formulated by the young men and
women of today. Since 2000, 28,500 Texas teachers have completed the Intel Teach
Program. To facilitate the development of the next generation of technology
professionals, Intel developed the Intel Teach Program which is designed as a worldwide
professional development program, aimed at giving teachers the tools to integrate
technology into their teaching curriculum. In addition, Intel currently staffs 100 paid
interns from the University of Texas. These interns are integrated into the Texas
research and development site and can further study and generate interest in research
and development in the community and at the universities.
Intel is dedicated to the education community through various outreach programs,
direct donations, and volunteer hours. A Director from the University of Texas
explained, “…the tech sector is a busy place right now with a lot going on. From a
student perspective it helps to attract interest.” Intel has invested in a variety of
university programs to foster the kind of experience students can leverage to continue
their education and find employment with sophisticated technology firms such as Intel.
The company has also been a long-time funder of diversity programs and has “changed
the conversation at a local and national level.”
“Intel’s commitment has made it possible to grow programs and grow staff. We have
gone from 4 to 42 programs, 60 to 1000 girls, and our 8 week program has expanded
from 250 girls to more than 500 girls.”
- Executive Director of an Austin non-profit organization
Intel provides direct capital dollars, access to resources, and numerous volunteers to
assist in these educational efforts. The Executive Director of a local non-profit said,
“Intel shows up when they say they will show up. It’s not just lip service.” Intel received
37
Intel’s Economic Impacts on the US Economy, 2008 – 2012
high marks from a Senior Director at a local education organization, “I would give Intel
high marks in volunteering…they are doing a good job recently on community
involvement…and they are very consistent, not doing things as one-offs, but having
conversations about the whole year and looking for opportunities to invest and grow.”
TACC & STAMPEDE
The Texas Advanced Computing Center (“TACC”) supports cutting-edge research
in nearly every field of science. TACC’s mission is to enable discoveries that improve
science and society through the application of advanced computing technologies. TACC
is comprised of 110 staff and students and operates some of the most powerful
supercomputers and visualization systems in the world. Supercomputing is a critical and
relatively new element of scientific discovery, allowing scientists to explore and
hypothesize around “phenomenon that are too big, small, fast, or dangerous to
investigate in the laboratory.”27 Scientists use the computing resources at TACC to
create forecasts, run complex scenario analyses, develop innovative solutions to age-old
questions, and perform other critical research.
Intel is a member of TACC’s Science and Technology Affiliates for Research (“STAR”)
program. The mission of this program is to promote a mutually beneficial exchange
between industry and academia in advanced computing techniques and technologies,
and at the same time foster a framework for technology innovation and support
economic development in the state of Texas and across the nation. Furthermore, Intel
collaborated with Dell and TACC to develop Stampede, one of the most advanced
scientific research instruments in the world. With more than 500,000 Intel Xeon PhiTM
coprocessors, Stampede was listed as the 7th most powerful advanced computing system
on the planet and the most powerful in the United States dedicated to academic
research.28 It took TACC approximately a year to design, build, and deploy the
Stampede supercomputer working closely with Intel and Dell engineers and university
researchers. The project was awarded $50 million in funding by the National Science
Foundation over a four year period with the option to renew in 2017, enabling four more
years of open science research.
“Stampede is an important part of NSF’s portfolio for advanced computing
infrastructure enabling cutting-edge foundational research for computational and
data-intensive science and engineering. Society’s ability to address today’s global
challenges depends on advancing cyberinfrastructure.”
- Farnam Jahanian, Head of NSF’s Directorate for Computer and Information
Science and Engineering29
Supercomputers like Stampede are important for a number of reasons: they allow
scientists to conduct research that would otherwise be impossible to observe; they
increase the speed and efficiency of research and development, allowing questions to be
http://www.tacc.utexas.edu/about/
http://www.top500.org/blog/lists/2012/11/press-release/
29 http://www.tacc.utexas.edu/stampede/
27
28
38
Intel’s Economic Impacts on the US Economy, 2008 – 2012
answered faster than with previous technology; and, they allow for simulation,
visualization, and intelligent data storage to grow knowledge stores and improve
understandings of everyday and complex events. Over the course of Stampede’s
lifetime, it is estimated that it will provide the equivalent of more than 400,000 years of
computing to tens of thousands of scientists.30 Intel’s contribution to the project goes
beyond the Xeon PhiTM coprocessors. Intel works with scientists in various fields to
adapt simulation packages to run efficiently on the coprocessors, enabling faster and
more complex research to be performed.
Stampede is an example of Intel technology leading the industry and improving on the
computing capabilities of the United States and local economies. This leadership drives
job growth, economic development, talent clustering, and national research comparative
advantages.
Community Impact
Intel understands the importance of being involved in the local community and invests
in the community in a number of ways including through direct employee volunteers
both in the community and at local science and technology festivals, and providing
resources for local events and initiatives.
Intel assists the community in developing a skilled workforce through support of local
organizations that train the adult workforce. One Texas program, which Intel directly
supports through volunteering and direct donations, trains 400 people every 6-8 weeks
for a skilled trade and 500 people per year on computer programming, technology, and
maintenance. Intel is involved heavily in the local Austin Science and Engineering
Festival, contributing $25,000 annually and encompassing 10,000 students and
volunteers. “The festival is focused on training the workforce of tomorrow,” said a longtime executive-director of the festival. “Intel is definitely the most involved of the tech
firms.”
“Intel attracts more companies to the region. Their design center attracts others.”
- Senior Director of an Austin workforce development program
30
http://www.tacc.utexas.edu/news/feature-stories/2013/texas-unleashes-stampede
39
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Case Study 2: Supply Chain Ecosystem
Fostering High Quality US-Based Supply through Domestic
Operations
Intel is the world’s largest semiconductor-chip maker by revenue and requires a vast
supply chain of upstream suppliers to fill its specialized requirements from raw
materials and other fabrication inputs, to manufacturing equipment, to construction
equipment and services, to fabrication-site labor. Its presence in the United States has
continued to provide the country with a global-leader position in PC microprocessors.
Intel also serves a key supply chain role looking downstream as a supplier not only to its
direct customers but also for its impact on other related parties, enterprise and
consumer, who use or integrate Intel’s products. Consideration of Intel’s entire supply
chain – both upstream and downstream – shows that the company has a substantial
impact on the US economy.
Upstream Impacts
For example, Intel’s advancements in technology, position in the market, and quality
brand name draw suppliers close to its US fabrication sites and can pave the way for
additional foreign direct investments into the United States. In fact, many of Intel’s
global suppliers have set up distribution, sales, and supply companies in the United
States in order to be closer to Intel and better integrate into Intel’s supply chain.
“We see suppliers opening applications labs and supply bases within a mile or two of
our campus. Japan-based companies and European-based companies have opened
sites near our Oregon and Arizona campuses to get in front of our people and to work
closely with Intel.”
- Intel Executive who works directly with suppliers
Downstream Impacts
Intel’s role in the US economy does not stop with a high-quality technology supply base.
Intel plays an integral part in supplying and enabling the original equipment
manufacturers (“OEMs”), such as Hewlett-Packard (“HP”), Dell, and Lenovo, to change
the ways end-users interact with and apply technology to their everyday lives. Intel
supplies its customers with quality products, a brand-name relationship, and strategic
guidance that can help to expand its customers’ client bases.
“We worked together with Intel on a very large, global target that was not currently
our account. In our partnership we convinced the account to move to our company
across desktops, notebooks, and workstations. The client relationship was successful
and renewed with another three-year contract, and one of the main reasons the
account cited for wanting to do business with us was because of the collaborative
relationship we had with Intel.”
- VP and GM of US Commercial Sales for a significant Intel client
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Intel’s Economic Impacts on the US Economy, 2008 – 2012
Impact in the United States
Intel is the fifth largest capital investor in the United States and number one among
manufacturers.31 From an expense standpoint and its impact on the supply chain, Intel
spent $11.0 billion on capital expenditures worldwide in 2012.32 This amount is largely
driven by Intel’s manufacturing and new expansion, approximately 75 percent of which
is housed in the United States. In addition, 42 percent of global supply chain spending
is sourced from companies located in the United States. In 2012, Intel had operational
expenditures of almost $2 billion in support of the Oregon site, approximately 90
percent coming from more than 2,000 US-based suppliers from 46 different states.33
Although more than three-fourths of Intel’s $53.3 billion in 2012 sales revenue was
generated outside the United States, the majority of the company’s microprocessor
manufacturing occurs in the United States at the Arizona, Oregon, New Mexico, and
other sites.
Exhibit 1.2: Intel Supply Chain
Downstream
Upstream
Raw Material
Suppliers
Original Equip.
Manufacturer
Manufacturing
Equip. Suppliers
Const. Equip. and
Service Suppliers
Intel Fab
Site
Original Design
Manufacturer
Other End-Users
Direct Fabrication
Labor
Secondary Supply Chain
Entertainment
Hotels
Restaurants
Rental Cars
Airport Business
Infrastructure
Philanthropies
Education
Public Programs
From a standpoint of resources employed in the United States, in 2012, Intel
Corporation had 49,721 employees within the United States, 5.7 times more than any
other country in which Intel operates. This number understates Intel Corporation’s
Diana G. Carew and Michael Mandel, “U.S. Investment Heroes of 2013: The Companies Betting on
America’s Future,” Progressive Policy Institute, September 2013.
32 Intel 2012 Annual Report – Intel Corporation only (i.e., excludes McAfee and Wind River subsidiaries).
33 Intel Personnel.
31
41
Intel’s Economic Impacts on the US Economy, 2008 – 2012
total employment since it does not take into account contract employees, interns, and
employees of subsidiaries. Intel Corporation’s five largest US sites by 2012 headcount
were: Oregon (16,381); Arizona (11,913); Folsom, California (6,209); Santa Clara,
California (5,876); and, New Mexico (3,335).34
Intel is a recognized leader in the technology supply chain winning multiple awards and
ranking highly among the largest companies in the world. For example, Intel ranked
seventh on Gartner’s 2012 Supply Chain Top 25 list for excellence in supply chain
management. This is also demonstrated in its supplier assistance initiatives, supplier
collaborations, and efforts around environmental sustainability and “conflict material”
avoidance.
Supplier Assistance Initiatives
Intel provides its suppliers with a number of beneficial initiatives. These programs not
only have a positive impact on the suppliers that they directly affect, but they also
contribute to a quality and sustainable US semiconductor and technology supplier
ecosystem. Suppliers receive tangible and intangible benefits from working with Intel
including: direct sales; access to Intel equipment, engineers and any shared product
roadmaps and technology plans; and the market perception of being a quality leader
given Intel’s selection of the company as a supplier.
Intel holds “Supplier Days” in which suppliers come together to discuss, learn, and
participate in working sessions. In addition, Intel assists its suppliers with health and
safety training. Suppliers often reach out to Intel and Intel proactively seeks out
opportunities to assist their suppliers. Intel performs a Supplier Quality Health
Assessment in which Intel performs a 3-4 day intensive program to assess 20 key
performance indicators. Intel provides the supplier with a report outlining the findings
of the assessment and strategically consults with the supplier on ways to improve
weaknesses. Recently, after Japan’s major 2011 earthquake and tsunami, some of Intel’s
Japanese suppliers noted that they were better prepared for that event because of Intel’s
vision and focus on risk management and supply chain resiliency.
34
Intel CSR Report 2012.
42
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Exhibit 1.3: Intel Supplier Imperatives
Designed to award and publicly recognize Intel suppliers for meeting cost, quality,
availability, delivery, technology and environmental, social and governance goals, the
Supplier Continuous Quality Improvement Program (“SCQI”) is another example of
Intel’s commitment to assist its suppliers, achieve performance, quality, and design
excellence. Annually, all of Intel’s suppliers are graded on a balanced scorecard
measuring key performance indicators. The balanced scorecard focuses on a number of
key areas including safety, quality, cost, technology, environmental and social
governance, and output. To recognize the efforts and the achievements of the suppliers
that meet the established goals, Intel publicly announces the winners of the SCQI award
raising the winning suppliers’ visibility and international recognition. An internal Intel
executive who works directly with suppliers stated, “We publicly recognize the
suppliers...acknowledging they are Intel suppliers, and in the top tier in terms of
capabilities.”
Supplier Collaborations
Intel hosts between 20-25 supplier collaborations per year within the equipment and
automation group alone. These collaborative relationships allow for mutually beneficial
innovation. Engineers from both the suppliers and Intel design and develop new
products, capital equipment, and new technologies. Engineers from the collaborating
suppliers have access to capital equipment, ideas, silicon wafers, pattern test structures,
and metrology capabilities that Intel maintains. Some of the associated capital
equipment Intel provides has a cost between $15 million and $50 million. As Intel’s
technology and equipment roadmap has expanded relative to competitors, its suppliers
receive access to equipment and technology otherwise unobtainable in the marketplace.
The suppliers benefit by avoiding steep capital expenditures, gaining access to Intel
43
Intel’s Economic Impacts on the US Economy, 2008 – 2012
engineers and experience, and joining Intel with innovating around leading-edge of
technologies.
Environmental Consciousness and Sustainability
Intel is focused on achieving a more environmentally sustainable business model. For
example, water is one of the biggest consumption items for Intel, using approximately 9
million gallons daily. About 22 percent of Intel’s daily water consumption occurs in its
Chandler, Arizona chip manufacturing plant. In a desert community that receives only
9 inches of average annual rainfall, water recycling is of paramount importance.
Currently, the Intel site recycles approximately 60 percent of its water, with plans to
increase that amount to 90 percent in the future. Intel and the city of Chandler, Arizona
are working together to solve the water problems. According to an article recently
published in BusinessWeek, “‘Intel and the city inked another agreement ahead of this
expansion in which the company would help secure and pay for added water rights,’ said
Doug Toy, Chandler’s Water Regulatory Affairs manager. It is also paying for upgrades
to the city’s wastewater-treatment plant. Intel has “been a very good partner,” Toy said.
‘They are part of the solution, not part of the problem.’”35
Social Consciousness and “Conflict Material”
Avoidance
Intel is a pioneer in working to put systems and processes in place to reduce the
possibility that the minerals it is purchasing and that its suppliers are providing are
“conflict minerals.” Conflict minerals are broadly defined as metals such as tantalum,
tin, tungsten or gold where the ores are mined and sold by militant groups to finance
violent activities. Intel was the first electronics company to publish goals around
manufacturing “conflict-free” products and has worked to achieve their goals in the
following ways, to name a few:36
1. Achieved its 2012 goal to be conflict-free for the metal tantalum. All tantalum
smelters identified in Intel’s microprocessor supply-chain have been validated to
be conflict-free via the Electronic Industry Citizenship Coalition and Global eSustainability Initiative.
2. Mapped greater than 90 percent of its supply-chain, identifying over 140 unique
smelters.
3. Conducted an on-the-ground review of the extractives and minerals trade in the
Democratic Republic of the Congo.
4. Initiated an industry-sponsored funding program called the “CFS Early Adopters
Fund” to accelerate smelter participation in validating conflict-free supply lines.
http://www.businessweek.com/news/2013-09-15/intel-refilling-aquifer-reflects-water-concernclimate-and-carbon#p2
36 http://www.intel.com/content/dam/doc/policy/policy-conflict-minerals.pdf
35
44
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Supply Chain Impacts as Seen Through the Hillsboro,
OR Fabrication Site
Intel’s supply chain impacts the United States and local economies in many and varying
ways. Among Intel’s significant centers of operation, this review will focus on Intel’s site
in Hillsboro, Oregon to elucidate the individualized effects of an Intel fabrication site
on a local community and economy. The main impacts of Intel in Oregon are listed
below:





Direct Economic Benefits – Intel’s supply chain is integrated into the US
economy. Interacting with coast-to-coast suppliers, Intel builds the workforce
through capital expenditures, improving its suppliers through consultative
support, and direct hiring.
Supplier Benefits – Intel provides a number of benefits to its suppliers and
those companies to which Intel supplies. From access to capital equipment to
health and safety training programs, Intel builds mutually beneficial
relationships and helps to create the top-tier suppliers in the semiconductor and
broader technology industry.
Clustering Impacts – Intel is a gravitational force in the technology industry.
Foreign and domestic companies feel a strong need to be close to that industry
leadership and Intel’s geographic locales, bolstering local economies and creating
technology ecosystems in metropolitan areas.
Community Involvement – Intel is one of the most philanthropic and
community oriented companies as described by interview respondents. Its
interaction with the local economies through education development,
fundraising, volunteering, and small-business-building activities strengthens the
locales in which it operates and by extension the broader US economy.
Industry Leadership – Intel’s supply chain has evolved over the years to be
one of the best in the world. Improving the supply chain allows the business to
run more efficiently. Acting as the middle of the computing supply chain, Intel
plays a critical role in growing the capabilities of suppliers and OEMs.
Each of these topics will be covered in greater detail below.
Direct Economic Benefits
Intel provides the Oregon region with approximately 16,400 direct jobs, making it the
state’s largest private employer. For perspective, Intel represents roughly 20% of tech
employment in Oregon which has more than 5,300 tech companies employing a total of
81,632 tech industry professionals.
Intel also compares favorably with respect to employee salaries and Oregon’s standard
of living. The average annual salary of tech sector employees in Oregon was $94,200 in
2012, or 123 percent higher than other private sector employment within Oregon.37
37
CyberStates Report.
45
Intel’s Economic Impacts on the US Economy, 2008 – 2012
“Intel’s average wage is approximately $125,000 here in the Portland metro area,
while average per capita income is $41,000.”
- President and CEO of the largest business advocacy organization in Oregon
Intel is the largest taxpayer in Washington County, contributing $20.8 million in taxes
to the County in 2012.38 Oregon does not have a sales tax; therefore, its excise tax (i.e.,
the tax for the privilege of doing business in the state) is the primary revenue source for
the state along with property and employment taxes. Tax revenues serve to fund, for
example, public safety employees, public school employees, government officials and
staff, and state economic development initiatives – tax contributions therefore provide
an employment impact beyond Intel’s direct workers.
“[As] the largest [employer] in the state...Intel has a huge impact from a state-wide
perspective.”
- President of a local Oregon Chamber of Commerce
Intel also impacts job creation through consistent and substantial capital spending.
Intel’s capital spending on its Washington County campuses in Oregon provides one
example. The company’s capital investments in the state exceed $25 billion since it
acquired its first piece of property in Oregon in 1974. A senior member of the Oregon
Building Trades and Portland Development Commission recently remarked that the
construction jobs that Intel provides have a ripple effect on the economy in numerous
areas including, for example, construction workers paying mortgages, going out to
dinner, and making other purchases.
“All of the construction jobs related to Intel’s new fabrication sites put the construction
industry back to work in the state [Oregon].”
- President and CEO of the largest business advocacy organization in Oregon
“Through some of our darkest times during the technology bust in 1999-2000, Intel
had cranes in the air doing construction. Intel makes a difference and is stable in our
economy.”
- President of a local Oregon Chamber of Commerce
Supplier Benefits
Intel’s suppliers in Oregon have access to Intel’s talented workforce and strategic
consulting, as well as materials, equipment, and ideas not available elsewhere in the
technology market. Intel’s Oregon-based suppliers are strategically located to reduce
logistics-related expenses and take part in the cluster’s exchange of capital, workforce,
and innovation. Becoming an Intel supplier brings with it the perception of being at the
leading-edge of technology innovation. This market perception can help local suppliers
to expand their knowledge-base, improve their functions, and win additional work.
38 Intel.
46
Intel’s Economic Impacts on the US Economy, 2008 – 2012
“We look for equipment suppliers that can meet our technological needs and provide
the lowest possible total cost of ownership including capital cost, consumption of spare
parts, uptime, and automation. We also look for companies that have an
environmental and social governance process and policy in place.”
- Intel manufacturing equipment buyer who works directly with suppliers
“Suppliers that work with Intel have to meet exacting standards and by doing so
demonstrate their ability to be world-class. It gets out to the industry who Intel works
with.”
- Intel manufacturing equipment buyer who works directly with suppliers
When considering the rigorous senior management review process that a supplier must
pass in order to become an Intel supplier, one can understand the perception of quality
and performance that an Intel supplier conveys. Intel assists suppliers that have not
fully matured in their understanding of their supply chain. Intel suppliers in Oregon
have access to the same programs and consultations as those available to all suppliers.
The Supplier Quality Health Assessment and the Supplier Continuous Quality
Improvement programs described earlier improve the suppliers’ business model and
can provide suppliers with an honest strengths, weaknesses, opportunities, and threats
(“SWOT”) analysis of where their operations stand relative to top-tier industry
benchmarks. Suppliers have commented that, “We could pay a lot of money to have
someone come in and do this, but Intel does it for free.” Some Intel suppliers comment
that the assessments are “balanced, fair, and analytical...they helps us see where we can
improve and be more efficient.”
“Our key message to our suppliers is not to meet the requirements just for Intel, but to
do it for themselves, to create a better, more high-performance supply chain.”
- Intel supply chain quality and integration manager
Clustering Impacts
Intel’s fabrication site in Oregon is among the largest and most technologically
advanced site in the Intel ecosystem. The talent and innovative spirit that surrounds the
site fosters growth opportunities for suppliers, start-ups, and economic value. Intel’s
presence in Oregon paves the way for other companies and worldwide individuals to
gravitate towards Intel’s critical mass. Intel’s presence helps to grow a highly talented
workforce through internal trainings, external involvement with colleges and
universities, and funding and support of Science, Technology, Engineering, and Math
(“STEM”) programs for students.
“Intel grows the local Oregon cluster through the labor pool that has learned crucial
technical skills and businesses that pop up to serve Intel.”
- Senior Vice President Research and Reports for a leading technology advocacy
group in the United States.
Intel’s supply partners generally make every effort to be close to large Intel sites and
gain access to Intel technologies. By responding to Intel’s supply requirements, local
47
Intel’s Economic Impacts on the US Economy, 2008 – 2012
vendors grow their capabilities and create further self-sustaining opportunities for
growth. The gravitational pull of Intel creates supply-chain clusters in each of their
manufacturing locations. As the President of a local Oregon Chamber of Commerce
described, “As a native Oregonian, I have seen the ecosystem and watched it grow.
Their supply chain wants to be located close to Intel which then draws other
companies.” Intel’s cluster extends to suppliers, local consumers, laborers, and
businesses, colleges, other manufacturers, governments and policy makers, and
throughout the local communities in tax dollars and philanthropy.
Exhibit 1.4: Intel Cluster
Colleges, Other Manufacturers,
Governments /Policy Makers
“Intel is the single most
important economic factor
in Oregon today...they
bring workers from worldwide over to here.”
Consumers, Laborers,
Local Businesses
Suppliers,
Logistics
“No one is as big and as
comprehensive as Intel.”
“If you took Intel out of
Oregon, we would be in
trouble.”
-
President and CEO of the
largest business advocacy
organization in Oregon
Community Involvement
Intel is one of the largest companies both nationally, and in Oregon. Intel impacts the
local communities in which it operates in a number of beneficial ways including:
philanthropy, education collaboration, donations, volunteering, and small-business
support. Intel is consistently involved in the community and helps to support economic
growth. Intel’s Oregon campus, being one the largest and most technologically
advanced among its sites, often hosts international training events and conferences.
These conferences inject international funds into the local community and bolster small
businesses through intermittent spending.
“The people that Intel brings to the region have a huge impact on the Washington
County hotels, restaurants, car rental services, etc...When Intel pays a bonus car
dealers in Washington County sell more cars.”
- President and CEO of the largest business advocacy organization in Oregon
48
Intel’s Economic Impacts on the US Economy, 2008 – 2012
When it comes to philanthropy on a national scale, Intel provides a strong corporate
example. Intel was named the “Most Philanthropic Company” in Oregon four years in a
row. Intel not only works in the community, but it works with the community, bringing
the technical expertise, creativity, and energy of its employees to volunteering and
community action. US employees donate hundreds of thousands of hours each year to
education, environmental programs, and other community needs. In Oregon, Intel has
won numerous awards from United Way including: Largest Total Employee Giving
Campaign, Largest Corporate Gift, and Campaign Chair Award, recognizing the tangible
benefits of Intel’s community involvement.
“Intel is an active participant in the community...It is smart, strategic, and targeted
with its philanthropy...with most of the tech industry being insular, Intel is more
outward-focused.”
- President and CEO of the largest business advocacy organization in Oregon
“Intel’s community involvement and philanthropy helps employees, helps its supply
chain customer base, helps the broader community...and builds goodwill.”
- Senior Vice President Research and Reports for a leading technology advocacy
group in the United States.
Many companies not integrated into Intel’s direct supply chain for semiconductor
fabrication in Oregon also benefit from Intel’s presence in the local community. Intel
interacts with these companies through the “Vantage Club” which is a collaborative
effort between Intel and the local Chamber of Commerce to match Intel employees with
local small-businesses for acquiring other goods and services by facilitating interactions
and making the connection easier and more efficient.
“Lots of businesses want access to Intel and Intel’s employees. [Vantage Club] is a
process by which we can collaboratively organize and coordinate that access...it also
takes those dollars paid to the 16,000+ Intel employees, some of whom do not live in
Hillsboro, and puts them into the local economy.”
- President of a local Oregon Chamber of Commerce
Industry Leadership
Intel’s Oregon operations illustrate Intel’s industry leadership. In 2012, Intel was
named the “Most Admired Technology Company” in Oregon for the eighth consecutive
year, based on a survey of more than 2,500 CEOs and top-level managers throughout
Oregon.
Intel’s supply chain is ranked seventh among Gartner’s 2012 Supply Chain Top 25.
Gartner applies the following criteria when assessing companies for the Supply Chain
Top 25 list: an outside-in focus; innovation within the supply chain and in connection
with new product introductions; strong partnership relationships with upstream and
downstream parties; and, commitment to operational excellence and continuous
improvement in people, processes, and supporting technology. Intel has reduced cycle
times by approximately 40 percent in recent years, reduced costs, and demonstrated
49
Intel’s Economic Impacts on the US Economy, 2008 – 2012
leadership in social responsibility. As one of the largest fabrication sites, Intel’s Oregon
location is a significant contributor to Intel’s global supply chain excellence.
“Intel is involved in helping us to define our roadmap focused on mobility in a
collaborative and open environment. This open and collaborative relationship
provides maximum benefit and value to our joint customers. We have collaborated to
build out exciting new solution sets for our customers.”
- VP and GM of US Commercial Sales for a significant Intel client
Intel maintains a vast yet high-quality supplier base across the globe. However, the
United States is Intel’s primary manufacturing geography and is home to many of Intel’s
largest and most technologically advanced campuses, including its Hillsboro, Oregon
campus. Many of Intel’s large suppliers have substantial presence within Oregon and
some suppliers are based and headquartered in Oregon. Having the Intel and supplier
presence has put Oregon on the map in terms of technology leadership and has brought
like-minded companies and individuals to the area. Intel has helped to put the United
States and Oregon at the leading edge of technology innovation and supply-chain
leadership.
“[In Oregon] there are businesses specializing in second tier supply chain that locate
near the Intel site. Specializations that these businesses have can feed into Intel's
supply chain and reinforce Intel’s decision to stay there…companies learn from one
another and grow with each other.”
- Senior Vice President Research and Reports for a leading technology advocacy
group in the United States
50
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Case Study 3: Intel Capital
Impact on the Corporate Venture Capital Industry and
Economic Growth
Intel Capital Background
Intel Capital was established in 1991 and has continuously been recognized as a market
leader in the corporate venture capital market ever since. An editor of a well-known
venture capital publication commented, “Intel Capital is the benchmark for corporate
venturing.” With a significant past and a breadth of investments and experience, Intel
Capital was also described by an editor of a corporate venture capital journal as “…a
model for other corporate venture capital firms…” Intel Capital brings not only years of
experience and direct capital to companies, but global reach, market validation, and
expert industry insights. Intel Capital strategically focuses on building technology
ecosystems through investments in mobility, software & services, consumer internet,
digital media & entertainment, enterprise, and manufacturing and labs.
Intel Capital’s mission is to spur innovation and inspire the entrepreneurial
spirit in support of Intel’s vision of creating and extending computing
technology to connect and enrich the lives of every person on Earth.
Intel Capital acts and invests on a stage-agnostic basis, meaning that its focus does not
trend toward early-stage start-ups, late-stage established businesses, or any stage in
between. This strategy allows for a diversified approach to investing in which no
potential investment is rejected based on stage, and rather all investments are assessed
on a merit-based approach. Intel Capital bases its decision to invest on a number of
factors including: potential market size; leadership team; and, strategic fit to Intel. Intel
Capital is funded from Intel Corporation’s available cash and typically invests between
$300 and $500 million per year. In FY2012 Intel Capital invested $352 million,
preceded by $526 million in FY2011.
Intel Capital operates in an industry where there are many large venture capital and
corporate venture capital players. While there is a noted cluster of Intel Capital
portfolio investments in and around Santa Clara, California where Intel Capital is
headquartered, there are more clusters of investment spread across the country in states
like Massachusetts, Florida, Washington, Texas, and North Carolina. Corporate
venturing specifically tends to be focused on the goals, strategy, and culture of the
parent. Intel Capital is consistent with setting the criteria for investment and has
talented individuals that understand the industry and its direction. An investment
manager that works for Intel Capital was described by a former CEO of an Intel Capital
investment company as, “…thoughtful…he understood our options from all
perspectives.”
Intel Capital has invested in success stories consistently over the years. Among Intel
Capital’s notable investments are those listed in the table below.
51
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table 10: Intel Capital –Notable Investments
Company
HQ Location
Founded
2012 Revenue
(millions)
Headcount
LOGMEIN
Boston, MA
2003 in
Hungary
$140
575
PEREGRINE
San Diego, CA
1990
$204
402
VOCERA
San Jose, CA
2000
$101
130
MOTRICITY
(Voltari)
Bellevue, WA
2001
$90
152
Intel Capital Economic Impacts as Seen from the Santa
Clara, California Headquarters
Intel Capital contributes to the US and local economy in a number of ways:







Job Creation – Direct capital gives investment companies the opportunity to
expand workforce and market, providing access to high-paying, fast-growing
jobs.
Industry Leadership – Intel Capital promotes technology advancement by
strategic investments. A number of industry veterans indicated that other
venture capital firms watch how Intel Capital operates and in what area and
company it chooses to invest.
Intel Capital Advantages – Intel Capital utilizes its extensive network,
technological expertise, breadth of experience, and understanding of the market
to help investments grow and thrive.
Talent Growth – The company not only grows talent externally, through jobs
created, promotion of Science, Technology, Engineering, and Math (“STEM”)
programs, and talent matching, but also grows talent internally, allowing for
technology spinoffs and start-up firms from Intel’s internal pipeline.
Clustering Effects – The presence of a large capital investor and the talent of
one of the largest technology companies worldwide, attracts like-minded
individuals and talent to the regions because of access to suppliers, capital, and
growing talent from universities.
Local Community Impact – Technology sector jobs are high-paying and Intel
and Intel Capital have a commitment to community involvement. The dollars
from payrolls are disbursed through purchasing and the community benefits
from volunteer hours and dollars from Intel Capital and Corporate.
Networking and Match-making – One of the most difficult things for startup companies is legitimizing their business and selling to the enterprise. Intel
Capital helps start-up companies to make important business development
connections, grow their businesses, and increase their contributions to the
economy via tax dollars, job creation, and introducing these companies to its vast
internal and external network to help them to succeed.
52
Intel’s Economic Impacts on the US Economy, 2008 – 2012
From a local perspective, it should be noted that Intel Corporation also is headquartered
in Santa Clara. While the impacts below focus on Intel Capital, incremental effects may
also be attributed to the parent company.
Each of the above topics will be covered in greater detail below.
Job creation
Intel Capital spurs the technology industry through direct capital investment, indirect
industry leadership and bringing additional investors to the table, and through a
consistent, measured process of matching portfolio companies with potential customers
and partners. Intel Capital has been operating within the corporate venturing space as a
leader for more than 20 years. Venture capital provides companies with much-needed
start-up funding for pioneering ideas and allows these companies to hire additional
talent, expand their market reach, further innovate, and transform their ideas into
tangible products. The US venture capital ecosystem fosters an attractive environment
for the world’s top talent and draws companies and individuals into the region. The
editor of a venture capital publication stated, “…getting jobs into a high-paying market
is certainly made easier with a VC firm.” Furthermore, direct job growth can be seen in
many cases. The CEO of a former portfolio company commented, “The investment
helped us to span out geographically and grow the sales team from 6 to 30 in less than a
year…”
Venture-backed jobs made up for 11 percent of US private sector employment in 2010.
For the same year, venture-backed revenue accounted for 10 percent of total US sales.
In addition, venture-backed jobs accounted for significant portions of major
employment industries within the US economy including: 90 percent of software jobs,
74 percent of biotechnology jobs, 72 percent of semiconductors/electronics jobs, 54
percent of computer jobs, and 48 percent of telecommunications jobs.39
“Intel has been very smart about a lot of the things they’ve done – particularly in VC.
They use their venture arm to influence the marketplace and to encourage certain
businesses to start or R&D processes to start...”
- Senior Vice President Research and Reports for a leading technology advocacy group
in the United States.
Industry Leadership
Intel Capital demonstrates industry leadership in a number of different ways. Whether
leading an investment round, investing in a new and innovative technology as an early
adopter, or filling out rounds by bringing their global investment syndicate of more than
30 co-investors, Intel Capital delivers value to the economy through growing the
companies of tomorrow. The president of a local chamber of commerce responded,
“Intel is one of our largest employers and they have trickled down in our economy by
helping many of the small businesses throughout the valley.”
39
NVCA Venture Impact Edition 6.0.
53
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Intel Capital is consistently on the “most active” list of venture capital firms and often
wins objective investment awards from trade publications including: Corporate Venture
Unit of the Year (2013)40; Top Technology VC of 201241; and, #1 for quantity of IPO
pipeline companies in portfolio42.
“[Intel Capital] is the biggest corporate VC firm around the world, so we spend as
much time as we can trying to understand what they do and why.”
- Founder and Editor-In-Chief for a prominent corporate venturing magazine
Intel Capital Advantages
Intel Capital has many strategic advantages which add value to its investments. These
value-add benefits include: recognized brand; technology expertise; and, networking
capabilities. A former CEO of an investment company described the benefits of Intel
Capital’s involvement as follows: “We were able to use the brand name in making
connections… Intel Capital really knew the domain…[Intel Capital Technology Days]
focused on making good matches between buyers and sellers. They were some of the
best to work with.”
“The partner we worked with was knowledgeable about the business, knew the
industry well, and had his ear to the ground. Of the investors we worked with, he was
among the best in knowing the industry.”
- Former CEO of a well-known software company venture-backed by Intel Capital
Intel Capital is a stage-agnostic investor which allows them to invest at any stage in the
life-cycle of the business.
Intel Capital also has a size, longevity, market presence, and leadership position that
make an investment more than just capital and ideas, but also a market perception that
the company being invested in has the appropriate direction, leadership, and is viable.
A CEO of a former investment company said, “When we thought about raising more
funds, we featured Intel quite prominently. We received more interest from VCs with
the Intel connection. The Intel connection helps other investors get over the initial
doubts/questions and puts stock in the claims you are making. The team, position in
the market, and strategy are legitimized.”
Intel Capital’s presence as an investor also helps with financing considerations. “Intel
Capital really helped to ensure the banks that we knew what we were doing and were
fully backed. They communicated to the banks that they did not have to worry about
[the company’s] legitimacy and long-term business proposition,” responded the CEO of
a former portfolio company. In some instances, Intel Capital’s investments put
companies on the map; in other investments, they legitimize companies that have been
on the map for some time.
Global Corporate Venturing Magazine.
PrivCo.
42 CBInsights.
40
41
54
Intel’s Economic Impacts on the US Economy, 2008 – 2012
“Having Intel Capital as an investor lends legitimacy when talking to key customers’
executives or other investors. Intel Capital as an investor is a stamp of approval that
is hard to match.”
- CEO of a former Intel Capital -financed semiconductor equipment manufacturer
“Intel Capital’s longevity, experience, size, consistency, and financial returns were
among the best, if not the best of any unit.”
- Founder and Editor-In-Chief for a prominent corporate venturing magazine
Intel Capital can also open doors for further financing and banking relationships. As
described above, Intel Capital has a syndicate of over 30 co-investors and Intel Capital
never goes into an investment alone. This allows companies additional access to capital
and Intel Capital the ability to invest in numerous companies to diversify their presence
and grow the industry. Economically, opening the investment and financing
opportunities for an investment company opens the doors for market growth, industry
growth, and job creation.
Talent Growth
Intel Capital’s investments and direct assistance outside of capital foster an
environment of talent growth and innovative ideas. Furthermore, Intel Capital and Intel
Corporation combine to develop new talent both through education initiatives in the
Science, Technology, Engineering, and Mathematics (STEM) fields and through internal
training and talent growth which advances the skills and capabilities of their own
employees. These employees and those individuals touched by Intel’s efforts to grow the
STEM careers and capabilities in the United States can form companies and start-ups of
their own, improving the technology ecosystem and further expanding the US economy.
“Intel Capital helped with introductions to people and building our executive staff. The
CEO Summit was good from a number of perspectives including imparting knowledge
on building and fielding a team, as well as gaining knowledge through workshops and
networking.”
- CEO of a former Intel Capital-financed semiconductor equipment manufacturer
“They are very engaged with the issues we are concerned about here...affordable
housing, transportation, education and making all those things better so that Intel and
other high-tech firms can draw the best and brightest workers and drive the local
economy.”
- President of a local Chamber of Commerce in which Intel Capital operates
Clustering Benefits
Intel Capital’s headquarters is in Santa Clara, California. Silicon Valley occupies
approximately the same area as Santa Clara and is home to a plethora of start-up and
early stage companies. For a start-up company, ease of access to capital is a
contributing factor to business location decisions. Intel Capital’s presence in Silicon
55
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Valley has attracted companies to locate in the local community so that the companies
can be close to their source of funding. Companies want to be able to quickly, easily,
and cheaply communicate face-to-face with Intel Capital, and as such, have often chosen
to locate in Santa Clara, California.
“Early on [in the 1990s] that really had an effect around Santa Clara where Intel [and
Intel Capital] is based. Many start-ups went there because of its proximity to Intel
Corporation…”
- Lead Editor of a widely-publicized venture capital journal.
Local Community Impact
Santa Clara County, California (a significant portion of what is commonly referred to as
Silicon Valley) is home to a multitude of venture capital firms, including Intel Capital,
and approximately $165 billion venture capital dollars have been spent since 1970. The
local median single family home price is $569,00043, compared with $212,300
nationally, showing the impact of high-salaried positions and the effects of the high-tech
industry on the local economy. The high local standard of living can be seen in Santa
Clara County’s $89,064 in median household income, which compares with $61,632 for
California44 and $50,502 nationally (i.e., 76% above the national median). Santa Clara
County maintains a budget of $4.2 billion45. These incomes and tax revenues help to
build significant ecosystems and inject major dollars into small businesses,
communities, public safety, capital projects, parks and recreation, and public works. An
editor of a local industry journal described how a few well-known start-ups made their
headquarters in economically depressed areas and quickly turned the micro-economies
from negative to positive.
“The company is paying significant taxes in the community that goes towards street
maintenance, emergency responders, locally-owned utilities, etc. From there it trickles
down in terms of hotel rooms, restaurants, meeting locations, and convention center
popularity. From an educational standpoint, they are engaged with and foster STEM
(Science, Technology, Engineering, and Math) education in its local school districts
and throughout the valley.”
- President of a local Chamber of Commerce
Intel Capital is continuously providing the region with capital investment, business
leadership, customer introductions, technology expertise, and merger and acquisition
consulting. These acts drive new business growth and economic improvement.
Community Economic Profile – City of Santa Clara, California.
http://quickfacts.census.gov/qfd/states/06/06085.html
45 http://www.mercurynews.com/elections/ci_21741987/santa-clara-county-tries-again-sales-tax
43
44
56
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Intel Capital Technology Days & Intel Capital Global
Summit
Intel Capital hosts the Intel Capital Global Summit which is an annual 1000 person
conference bringing together entrepreneurs from its portfolio companies and Global
1000 corporate decision makers to help each find partnership, collaboration or even
sales opportunities.46 Portfolio companies benefit from increases in sales, networking
with key customer contacts, and gaining an understanding of what customers are
looking for in the marketplace. Any company can choose to participate or not
participate in meetings with specific decision makers and at times companies may not fit
with the program; however, according to a former CEO of a portfolio company “access to
the Intel network is a business development tool that not many companies refuse.”
Intel Capital Technology Days has a similar goal as the Intel Capital Global Summit and
connects corporate decision makers with Intel Capital portfolio companies. As portfolio
companies grow their sales, additional workers are needed to add capacity, sales
support, delivery, etc. These events indirectly create jobs by creating orders,
collaborative projects, and connections. Companies from Intel’s extensive network gain
access to Intel Capital’s portfolio and can often improve business and drive additional
top-line and bottom-line growth, further trickling down to national tax revenues which
are then used to fund jobs in the public safety, governmental, education and
infrastructure sectors.
“The greatest interaction we received from Intel Capital was in sales and marketing
for exposure and customer access. They were by far the best at that.”
- Former CEO of a well-known software company venture-backed by Intel Capital
Intel Capital also hosts an annual Intel Capital Global Summit, bringing together
innovators, key executives, thought leaders, governmental officials, and professional
service providers. It is held in Southern California and is strategically designed to
immerse attendees in a world of networking. Activities available at the summit include
one-on-one introductions and targeted match-making sessions, panel discussions and
social events. All events are aimed at establishing relationships with Global 1000
companies, offering new sales opportunities to portfolio companies, and providing key
decision makers in the Intel network access to the ideas, innovations, and innovators
that can stimulate growth.
In 2012, Intel Capital generated more than 3,500 engagements between portfolio
companies and customers; hosted more than 1,800 Global Summit Connect meetings;
and, hosted 76 Intel Capital Technology Days resulting in more than 1,700
introductions. The growth created by these events directly affects the US and local
economy through, among other things, job creation, additional tax revenues, research &
development, and higher donations from excess funds. The graphic below depicts how
these events drive economic benefit.
46
Top 1000 companies by revenue as determined by Forbes.
57
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Exhibit 1.5: Intel Capital Technology Days and Intel Capital Global Summit Web
58
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Appendix A: Data Sources and Methodology
This Appendix describes the methodology used to derive the results for the study. It
first discusses the IMPLAN model which was used to estimate many of the impacts in
this report. It also discusses the data sources PwC utilized to develop estimates of Intel’s
direct employment, labor income, and GDP impacts and capital investment impacts. It
then describes PwC’s use and adjustment of the IMPLAN model to capture a more
complete estimate of Intel’s overall impact on the US economy. These adjustments
capture capital investment impacts and distribution channel impacts which are not
necessarily incorporated into other economic impact analyses.
The IMPLAN model, an input-output (I-O) model based on Federal government data,
was used to estimate Intel’s overall economic impact. I-O modeling is typically
employed to analyze how a change in economic activity in one sector of the economy
affects activities in other sectors of the economy. In a so-called “marginal” impact
analysis, I-O model results can be viewed as showing the impact of small changes in
activity in one sector (e.g., semiconductor manufacturing) on the rest of the economy
before any price adjustments and before businesses, workers, and consumers adjust
their activities. The ultimate economic impact of a change in activity will be less
pronounced than shown by I-O results, particularly if induced price changes are large.
I-O models can also be used in an economic contribution analysis, as done in this study.
By simulating a “complete shutdown” of an existing sector, an economic contribution
study attempts to quantify the portion of an economy that can be attributed to such an
existing sector. It uses the I-O model to identify all backward (i.e., upstream) linkages
in the study area. An economic contribution analysis, when compared with the entire
study area economy, offers insights into the relative extent and magnitude of a company
or an industry in the study area. However, this is not to say that a complete shutdown of
Intel would result in the permanent loss of the jobs and output attributable to the
company through this exercise. In this unlikely event, the resources currently allocated
to semiconductor manufacturing may find employment in other industries, which would
compensate in part for the loss of the jobs and output from the semiconductor sector.
The latest version of the IMPLAN model, which is used for this study, incorporates the
input-output relationships for 2011. It does not reflect the 2013 comprehensive revision
of the industry economic accounts by the Commerce Department, which has not yet
been released. The 2013 comprehensive revision will record research and development
expenditures as capital investment instead of an item of cost.47 An IMPLAN model that
incorporates this revision may estimate greater impacts of the activities of research and
development intensive industries, such as the semiconductor industry.
47
For further information on the revision see “Preview of the 2013 Comprehensive Revision of the
National Income and Products Accounts,” Survey of Current Business, March 2013.
59
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Estimating the Direct Jobs, Direct Labor Income and Direct GDP
This report uses data on direct employment, employee compensation, and capital
expenditures provided by Intel. Intel provided data for Intel Corporation and for its two
largest wholly-owned subsidiaries -- McAfee, Inc. and Wind River Systems, Inc. The
employment data include both full-time and part-time workers. Employee
compensation includes wages, salaries and fringe benefits.
Intel’s contribution to GDP was estimated based Intel’s employment and the
semiconductor industry’s average GDP to employment ratio from the IMPLAN model.
Estimating the Indirect and Induced Economic Impacts
Estimates of the indirect and induced economic impacts of Intel were derived based on
the IMPLAN model for the United States. The IMPLAN model is built around an
“input-output” table that relates the purchases that each industry has made from other
industries to the value of the output of each industry. To meet the demand for goods
and services from an industry, purchases are made in other industries according to the
patterns recorded in the input-output table. These purchases in turn spark still more
purchases by the industry’s suppliers, and so on. Additionally, employees and business
owners make personal purchases out of the additional income that is generated by this
process, sending more new demands rippling through the economy.
Multipliers describe these iterations. The Type I multiplier measures the direct and
indirect effects of a change in economic activity. It captures the inter-industry effects
only, i.e., industries buying from local industries. The Type II (Social Accounting Matrix
or SAM) multiplier captures the direct and indirect effects and, in addition, it also
reflects induced effects (i.e., changes in spending from households as income increases
or decreases due to the changes in production). The indirect and induced impacts by
Intel on other sectors of the economy in terms of employment, labor income (including
wages and salaries and benefits as well as proprietors’ income), and GDP were
calculated through the multiplier process built into the model.48
The magnitude of the multipliers within the IMPLAN model varies from year to year.
This variability is reflected in the estimates of Intel’s impacts on the US economy. For
example, in Table 5, the ratio of Intel’s indirect and induced GDP impacts to direct GDP
impact was lower in 2009 (2.2) during a period of economic contraction compared to
the ratio in 2012 (2.7) during 2012 when the economy was expanding.
Because the IMPLAN models are used for total impact analysis (as opposed to marginal impact
analysis) in this study, necessary adjustments are made to the initial indirect and induced impact
estimates to prevent double-counting. For instance, the indirect and induced effects from the estimates
that are mapped to the semiconductor industry are adjusted downward to reflect Intel’s share.
48
60
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Estimating Capital Investment Impact
To quantify Intel’s capital investment impact, PwC used capital expenditure data for
2008 through 2012 that Intel provided to the Census Bureau as part of the Annual
Capital Expenditures Survey. For the impact analysis, capital spending was then
translated into purchases of capital assets by type through the use of the so-called
“capital flow matrix” from the US Department of Commerce.
Estimating Distribution Channel Impacts
PwC estimated Intel’s share of the semiconductor industry’s distribution margin
available from the IMPLAN model to capture impacts associated with the distribution of
Intel’s products. Based on these margins, we estimated the related impact on
employment, labor income, and GDP.
61
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Appendix B: Intel’s Indirect and Induced Impact on the US Economy by Sector
Table B-1.− Results for 2008
Sec tor Desc ription
Em ploy m en t*
I ndirec t
L abor In com e ($ m illion )**
In du c ed
I ndirect
Indu c ed
GDP ($ m illion)
In direc t
I ndu ced
Operational I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufac turing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
213,900
800
2,200
1 ,5 00
6,600
30,600
1 8,5 00
1 1 ,200
6,200
1 2,200
1 1 1 ,1 00
1 3,000
195 ,000
4,1 00
1 ,000
800
2,200
9,1 00
38,1 00
5,7 00
3,500
27 ,300
96,000
7 ,200
$14,18 0
$28
$21 4
$1 94
$368
$ 2,5 03
$1 ,287
$5 94
$642
$7 29
$ 6,67 8
$944
$8 ,962
$1 35
$1 0 2
$1 00
$1 24
$621
$1 ,45 6
$303
$31 0
$1 ,227
$4,05 8
$5 25
$22,799
$42
$622
$7 02
$ 41 6
$5,5 36
$2,231
$7 98
$1 ,069
$2,021
$8,285
$1 ,07 6
$15 ,8 61
$ 205
$296
$362
$1 40
$1 ,285
$2,37 9
$41 2
$663
$4,5 7 8
$4,942
$5 99
Capital In vestm ent I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufac turing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
19,200
0
1 00
0
4,600
4,200
1 ,800
7 00
400
900
6,400
1 00
13,700
300
1 00
1 00
200
600
2,600
400
200
1 ,800
7 ,200
200
$1,348
$1
$5
$5
$245
$423
$1 25
$36
$ 41
$40
$41 9
$7
$600
$8
$4
$6
$9
$41
$98
$20
$22
$83
$298
$1 1
$1,8 23
$2
$1 8
$20
$25 8
$5 89
$208
$48
$85
$1 1 8
$47 3
$6
$1,05 8
$1 2
$1 3
$ 23
$1 1
$ 84
$1 59
$27
$ 45
$31 3
$ 360
$10
Distribution Ch annel I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufac turing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
5 7,000
1 00
200
1 00
300
900
37 ,400
5 ,000
5 00
1 ,7 00
9,200
1 ,600
38 ,000
800
200
1 00
400
1 ,800
7 ,400
1 ,1 00
7 00
5 ,300
1 8,800
1 ,400
$3,78 6
$2
$ 21
$8
$1 7
$65
$2,699
$248
$5 3
$94
$461
$1 1 9
$1,75 2
$26
$20
$1 9
$24
$1 22
$284
$5 9
$61
$240
$7 93
$1 0 2
$6,38 1
$3
$61
$28
$20
$ 1 49
$4,692
$336
$94
$283
$ 581
$ 1 35
$3,102
$40
$ 58
$7 1
$27
$253
$464
$80
$1 30
$896
$966
$1 1 7
Total Indirect and I nduced I m pacts
290,100
246,700
Sour ce: Pw C calcu lations u sing th e IMPLAN m odeling sy stem .
* Employ ment is defined as th e nu m ber of fu ll- and par t-tim e jobs, inclu ding self-em ploy m ent.
** Labor income is defined as w ages and salaries and benefits and propr ietor s' incom e.
62
$19,314
$11,313
$31,003
$20,020
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table B-2.− Results for 2009
Sector Description
Em ploy m ent*
Indirect
Labor I ncom e ($ m illion)**
I nduced
Indirect
I nduced
GDP ($ m illion)
Indirect
I nduced
Operational I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
210,900
800
2,1 00
1 ,400
6,500
30,1 00
1 8,300
1 1 ,1 00
6,1 00
1 2,000
1 09,7 00
1 2,800
195 ,000
4,1 00
1 ,000
800
2,200
9,1 00
38,1 00
5,7 00
3,500
27 ,300
96,000
7 ,200
$13,783
$24
$1 37
$1 80
$358
$2,340
$1 ,328
$57 1
$641
$7 1 1
$6,561
$933
$8 ,943
$1 1 7
$66
$94
$1 23
$599
$1 ,482
$294
$31 2
$1 ,21 2
$4,1 20
$525
$21,871
$36
$398
$652
$405
$5,049
$2,302
$7 67
$1 ,061
$1 ,989
$8,1 48
$1 ,064
$15 ,721
$1 7 8
$1 92
$341
$1 39
$1 ,1 90
$2,422
$399
$663
$4,581
$5,01 7
$599
Capital Investm ent I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
22,700
0
1 00
0
6,500
4,600
2,000
800
400
1 ,000
7 ,200
1 00
15 ,800
300
1 00
1 00
200
7 00
3,000
500
300
2,1 00
8,300
200
$1,5 77
$1
$6
$6
$350
$47 0
$1 34
$41
$46
$45
$468
$8
$701
$9
$4
$7
$1 1
$47
$1 1 4
$24
$26
$97
$348
$1 3
$2,111
$2
$21
$23
$369
$658
$222
$54
$94
$1 33
$529
$7
$1,236
$1 4
$1 5
$27
$1 3
$ 98
$1 85
$ 32
$ 52
$366
$421
$1 2
Distribution Channel I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
5 7,300
1 00
200
1 00
300
900
37 ,60 0
5,000
500
1 ,7 00
9,300
1 ,600
38,300
800
200
1 00
400
1 ,800
7 ,500
1 ,1 00
7 00
5,400
1 8,900
1 ,400
$3,922
$2
$1 4
$7
$1 7
$62
$2,847
$242
$54
$94
$464
$1 1 9
$1,761
$23
$1 3
$1 8
$24
$1 1 8
$291
$58
$61
$239
$81 1
$1 03
$6,5 97
$3
$40
$26
$20
$1 31
$4,949
$329
$94
$285
$585
$1 36
$3,096
$ 35
$ 38
$67
$27
$236
$47 6
$7 8
$1 30
$903
$988
$1 1 8
Total Indirect and I nduced Im pacts
290,900
249,100
Sou rce: Pw C calculations u sing the IMPLAN m odeling sy stem .
* Employ ment is defined as the nu m ber of full- and part-tim e jobs, including self-em ploy m ent.
** Labor income is defined as w ages and salaries and benefits and pr oprietors' incom e.
63
$19,282
$11,405
$30,5 80
$20,05 3
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table B-3.− Results for 2010
Sector Description
Em ploy m ent*
I ndirect
Labor I ncom e ($ m illion)**
Induced
I ndirect
I nduced
GDP ($ m illion)***
Indirect
I nduced
Operational I m pact
A griculture
Mining
Utilities
Construction
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ices
Other
213,700
800
2,200
1 ,500
6,600
30,400
1 8,500
1 1 ,200
6,200
1 2,200
1 1 1 ,1 00
1 3,000
201,8 00
4,200
1 ,1 00
800
2,300
9,400
39,400
5,900
3,600
28,200
99,400
7 ,500
$14,328
$26
$1 58
$1 87
$363
$2,41 6
$1 ,352
$ 590
$665
$ 7 35
$6,865
$97 1
$9,434
$1 30
$7 8
$1 00
$1 27
$639
$1 ,51 8
$31 4
$326
$1 ,289
$4,355
$559
$22,734
$39
$460
$67 7
$41 0
$5,223
$2,344
$7 93
$1 ,085
$2,07 2
$8,522
$ 1 ,1 08
$16,599
$1 98
$227
$362
$1 44
$1 ,298
$2,483
$427
$686
$4,836
$5,302
$637
Capital I nvestm ent I m pact
A griculture
Mining
Utilities
Construction
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ices
Other
26,500
1 00
1 00
1 00
7 ,200
5,500
2,300
900
500
1 ,200
8,500
1 00
18,100
300
1 00
1 00
200
800
3,500
500
300
2,400
9,7 00
200
$1,8 62
$2
$7
$7
$ 387
$ 57 2
$1 58
$49
$55
$54
$561
$1 0
$828
$1 1
$5
$9
$1 3
$56
$1 35
$28
$30
$1 1 5
$41 2
$1 6
$2,501
$2
$25
$27
$408
$800
$262
$64
$1 1 3
$1 59
$633
$9
$1,460
$1 7
$1 8
$32
$1 6
$1 1 5
$21 9
$38
$62
$432
$497
$1 4
Distribution Channel I m pact
A griculture
Mining
Utilities
Construction
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ices
Other
58 ,000
1 00
200
1 00
300
900
38,000
5,1 00
500
1 ,7 00
9,400
1 ,7 00
38,700
800
200
200
400
1 ,800
7 ,600
1 ,1 00
7 00
5,400
1 9,1 00
1 ,400
$4,022
$2
$1 6
$7
$1 7
$65
$2,904
$251
$56
$98
$482
$1 24
$1,8 15
$25
$1 5
$1 9
$24
$1 23
$292
$60
$63
$248
$838
$1 07
$6,770
$3
$46
$27
$20
$1 43
$5,049
$341
$96
$296
$608
$1 42
$3,194
$38
$44
$69
$28
$251
$47 7
$82
$1 32
$931
$1 ,020
$1 22
Total Indirect and I nduced Im pacts
298,200
258 ,600
Sou rce: PwC calculations u sing the IMPLAN m odeling sy stem .
* Employ ment is defined as the nu m ber of fu ll- and part-tim e jobs, inclu ding self-em ploy m ent.
** Labor income is defined as w ages and salar ies and benefits and proprietor s' incom e.
64
$20,212
$12,077
$32,004
$21,253
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table B-4.− Results for 2011
Em ploy m ent*
Sector Description
Indirect
Labor I ncom e ($ m illion)**
I nduced
Indirect
I nduced
GDP ($ m illion)
Indirect
I nduced
Operational I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
237,400
900
2,300
1 ,600
7 ,200
32,800
20,000
1 2,300
7 ,000
1 3,800
1 25,000
1 4,500
226,200
4,800
1 ,200
900
2,600
1 0,500
44,200
6,600
4,1 00
31 ,600
1 1 1 ,300
8,400
$16,122
$28
$1 7 7
$206
$40 0
$2,605
$1 ,47 8
$658
$7 60
$841
$7 ,850
$1 ,1 21
$10,803
$1 47
$90
$1 1 4
$1 44
$7 23
$1 ,7 23
$358
$37 3
$1 ,47 3
$5,01 4
$644
$25 ,45 6
$43
$51 4
$7 47
$452
$5,583
$2,562
$885
$1 ,237
$2,401
$9,7 52
$1 ,27 8
$19,006
$224
$262
$41 4
$1 63
$1 ,47 0
$2,81 8
$487
$7 82
$5,549
$6,1 04
$7 34
Capital Investm ent I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
5 4,700
1 00
200
1 00
21 ,200
9,500
3,900
1 ,600
900
2,200
1 4,800
200
36,000
7 00
1 00
1 00
400
1 ,7 00
7 ,000
1 ,000
7 00
4,7 00
1 9,1 00
500
$3,742
$3
$1 5
$1 4
$1 ,1 67
$980
$27 4
$86
$97
$1 01
$987
$1 8
$1,662
$22
$1 1
$1 8
$25
$1 1 2
$27 1
$56
$61
$230
$826
$31
$4,916
$4
$50
$50
$1 ,229
$1 ,384
$455
$1 1 3
$200
$294
$1 ,1 22
$1 5
$2,930
$ 33
$ 36
$ 64
$31
$231
$440
$7 6
$1 24
$868
$998
$ 29
Distribution Channel I m pact
A gric ulture
Mining
Utilities
Construc tion
Manufacturing
Wholesale and retail trade
Transportation and warehousing
Information
Financ e, insuranc e, real estate, rental and leasing
Serv ic es
Other
63,100
1 00
200
1 00
300
1 ,000
41 ,7 00
5,400
600
1 ,900
1 0,00 0
1 ,800
41,400
900
200
200
500
1 ,900
8,1 00
1 ,200
7 00
5,800
20,400
1 ,500
$4,339
$2
$1 7
$8
$1 9
$7 0
$3,1 20
$27 1
$61
$1 0 7
$528
$1 36
$1,977
$27
$1 6
$21
$26
$1 33
$31 5
$66
$68
$27 0
$91 8
$1 1 8
$7,28 7
$3
$50
$30
$22
$1 54
$5,407
$368
$1 05
$328
$666
$1 55
$3,480
$41
$ 48
$7 6
$30
$27 1
$51 5
$ 89
$1 43
$1 ,01 6
$1 ,1 1 7
$1 34
35 5 ,200
303,600
$24,203
$14,441
$37,65 8
$25 ,416
Total Indirect and I nduced Im pacts
Sou rce: Pw C calculations u sing the IMPLAN m odeling sy stem .
* Employ ment is defined as the nu m ber of full- and part-tim e jobs, including self-em ploy m ent.
** Labor income is defined as w ages and salaries and benefits and pr oprietors' incom e.
65
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Table B-5.− Results for 2012
Sector Description
Em ploy m ent*
Indirect
Labor I ncom e ($ m illion)**
Induced
Indirect
Induced
GDP ($ m illion)
Indirect
Indu ced
Operational Im pact
A griculture
Mining
Utilities
Construction
Manufac turing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ic es
Other
25 4,100
1 ,000
2,500
1 ,7 00
7 ,7 00
34,900
21 ,400
1 3,1 00
7 ,400
1 4,800
1 34,000
1 5 ,600
242,200
5 ,1 00
1 ,300
900
2,800
1 1 ,300
47 ,300
7 ,1 00
4,400
33,900
1 1 9,200
8,900
$17,5 78
$31
$1 94
$224
$432
$2,7 7 0
$1 ,5 88
$7 1 6
$831
$91 7
$8,640
$1 ,235
$11,821
$1 58
$99
$1 25
$1 56
$7 83
$1 ,869
$390
$407
$1 ,609
$5 ,5 1 6
$7 09
$27,645
$47
$5 64
$81 2
$489
$5 ,891
$2,7 54
$964
$1 ,347
$2,633
$1 0,7 37
$1 ,409
$20,798
$242
$289
$452
$1 7 7
$1 ,5 92
$3,056
$5 31
$852
$6,084
$6,7 1 5
$809
Capital Investm ent I m pact
A griculture
Mining
Utilities
Construction
Manufac turing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ic es
Other
67,600
1 00
300
1 00
33,400
9,600
3,800
1 ,600
900
2,300
1 5 ,300
200
42,400
800
200
200
500
2,000
8,200
1 ,200
800
5 ,500
22,5 00
500
$4,489
$4
$1 9
$1 5
$1 ,866
$97 2
$27 4
$89
$99
$1 1 3
$1 ,01 9
$1 8
$1,989
$26
$1 3
$21
$30
$1 34
$324
$67
$7 3
$27 5
$989
$37
$5 ,766
$4
$61
$53
$1 ,968
$1 ,391
$45 7
$1 1 8
$205
$322
$1 ,1 7 0
$1 6
$3,5 12
$40
$43
$7 6
$38
$27 7
$527
$91
$1 49
$1 ,040
$1 ,1 96
$35
Distribu tion Channel I m pact
A griculture
Mining
Utilities
Construction
Manufac turing
Wholesale and retail trade
Transportation and warehousing
Information
Finance, insurance, real estate, rental and leasing
Serv ic es
Other
69,600
1 00
300
1 00
400
1 ,1 00
46,1 00
5 ,900
600
2,1 00
1 1 ,000
1 ,900
45 ,5 00
1 ,000
200
200
500
2,1 00
8,900
1 ,300
800
6,400
22,400
1 ,7 00
$4,839
$2
$1 9
$9
$21
$7 8
$3,464
$303
$69
$1 21
$5 98
$1 5 4
$2,226
$30
$1 9
$23
$29
$1 48
$35 1
$7 3
$7 7
$303
$1 ,039
$1 33
$8,120
$4
$5 7
$34
$24
$1 7 1
$6,001
$41 3
$1 1 7
$37 0
$7 54
$1 7 5
$3,918
$45
$54
$85
$33
$302
$57 5
$1 00
$1 60
$1 ,1 47
$1 ,265
$1 52
391,300
330,100
$26,906
$16,037
$41,5 31
$28,227
Total I ndirect and I nduced Im pacts
Sour ce: Pw C calcu lations u sing the IMPLAN m odeling sy stem .
* Employ ment is defined as the nu m ber of fu ll- and part-tim e jobs, inclu ding self-em ploy m ent.
** Labor income is defined as w ages and salaries and benefits and pr oprietors' incom e.
66
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Appendix C: Literature Review
Table C-1 - Summary of Findings
Author /
Date
Aizcorbe,
Oliner, and
Sichel
Title
Topic / Focus / Question
Geography /
Sectors Covered
“Shifting Trends in
Semiconductor Prices and
the Pace of Technological
Progress”
 Price decline (rapid in
90s, slowed 2001-2006)
Semiconductor
manufacturing
September
2006
Time Period
1990s-Early
2000s
 Price swings reflect
changes in price-cost
markups and trends
November
2001
Determines change in price
of semiconductors and their
corresponding contribution
to price declines in
computers and
communications equipment
 Intel actively invests in other companies and nascent industries with the aim to spur
demand for its products.
 Swings in price-cost markups account for considerable part of price dynamics.
 After controlling for markups, implied cost trends point to notably smaller swings in pace
of technical progress.
 Implied cost trends may be affected by factors that are largely unrelated to pace of
technical progress.
 Slower cost declines since
2001 not mirrored by
deceleration in pace of
advance in
semiconductor
technology
"The Role of
Semiconductor Inputs in
IT Hardware Price
Decline: Computers vs.
Communications.”
 Intel is the dominant producer of MPU chips.
 Faster price declines for DRAM and MPU chips in mid-90s were followed by slower price
declines after 2001.
 Shift to faster cost
declines correspond to
speed-up in pace of
advance in
semiconductor
technology
Aizcorbe,
Flamm, and
Khurshid
Findings
 Worldwide and
US
 Semiconductor
manufacturing
 Computer,
communications,
and consumer
electronics
manufacturing
1992-1999
 Communications equipment prices do not fall as fast compared to computer prices from
the 1992-1999 period.
 End-use price decline of computers was 40.3% in 1998.
 Semiconductors' price decline contributed 16.1%-23.8% of the price decline in 1998.
67
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Author /
Date
Bosworth and
Triplett
(Brookings
Institution)
Title
“What’s New About the
New Economy? ICT,
Economic Growth and
Productivity”
Spring 2001
Topic / Focus / Question
 Measures contribution of
ICT on output growth for
US Nonfarm Business
and Private Domestic
Economy
Geography /
Sectors Covered
All sectors
Time Period
1973-1999
Findings
 Services of ICT capital provide all of the acceleration in growth of capital services in late
1990s.
 ICT will continue to impact labor productivity. The source of multifactor productivity will
continue to be tied to gains in the production of ICT and demand for ICT capital.
 Discusses link between
ICT and multifactor
productivity
 Measures role of capital
accumulation and
amount of economic
growth not explained by
growth in productive
inputs
 Examines the impact on
labor productivity and
MFP
Crafts
July 2004
Corrado,
Hulten and
Sichel
September
2009
"Social Savings as a
Measure of The
Contribution of a New
Technology to Economic
Growth"
Measures direct, indirect,
and social welfare
contributions of new
technologies
 Western
economies
 All sectors
1985-2002
“Intangible Capital and
US Economic Growth”
 Examines treatment of
intangible investment in
measures of GDP
ICT impact on US
economy
1973-2003
 Change in Social Savings of ICT as percentage of GDP was 4.1% from the 1992-1999 period
and 5.6% from the 1985-2001 period.
 IT Sector has a 16.7 annual percentage consumer price decline during the 1996-2000
period.
 Including intangible capital in growth measures results in increases in rate of change of
output per worker.
 The effects of the "ICT revolution" have not been fully encapsulated in growth figures.
 Creates new sources-ofgrowth (SOG) estimates
to account for growth in
output due to omission of
intangibles
 The role of MFP is correspondingly diminished after accounting for intangible capital.
 Labor’s income share of growth has decreased significantly over time.
 Including intangible investment in real output increases estimates of the growth rate of
output per hour by 10-20% relative to baseline.
68
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Author /
Date
Gordon
(NBER)
March 2010
Jorgenson
Title
Topic / Focus / Question
“Revisiting US
Productivity Growth Over
the Past Century with a
View of the Future”
Long-run growth rates of LP
and MFP
“Information Technology
and the US Economy”
 Development of ICT is a
series of positive but
temporary shocks
(1990s)
March 2001
Geography /
Sectors Covered
US economy
Time Period
1954-2007
“Econometric Modeling
of Technical Change”
2010
Computers,
communications
equipment, and
software
1949 – 1999
Measures rate and
bias of technical
change for each
sector in US
economy
1960-2005
 Examines the impact of
ICT investment on
resurgent world
economic growth
 World economy,
seven regions,
14 major
economies
1989-2004
 Allocates growth of world
output between input
growth and productivity
 Section focuses
on developing
Asia
ICT has produced
fundamental/permanent
change to US economy
 Provides a new approach
to modeling substitution
and technical change in
growth measurement
 Represents rate and
biases of technical
change by
unobservable/latent
variables
Jorgenson and
Vu
2007
“Information Technology
and the World Growth
Resurgence”
 Almost all of capital-deepening effect is contributed to ICT capital for the 1995-2000
period.
 ICT contribution to overall productivity fell from 74% in 1995-2000 to 43% during the
2000-2007 period.
 There was a sharp acceleration in the level of economic activity from 1995 through 1999.
 ICT capital services made up half of capital input contribution from 1995 through 1999.
 Contribution of ICT production almost doubled, relative to the 1990-1995 period and
accounted for only 28.9% of increased growth in output. There has been a sharp response
to ICT price declines since 1995.
 Competing perspective is
Jorgenson and
Jin
Findings
 Biases of technical change are substantial in magnitude, comparable to response in price
changes.
 The biases of technological change appear in measures of capital accumulation and energy.
 Latent bias of technical change varies across industries. For example, the impact for
capital input is overestimated for coal mining and underestimated for petroleum refining.
 Input growth predominates overall output growth.
 Differences in per capita output levels are explained by differences in per capita input,
instead of variations in productivity.
 US investment in ICT equipment and software was most important source of growth, while
non-ICT predominated, followed by labor input (outweighing labor quality).
69
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Author /
Date
Jorgenson, Ho
and Samuels
November
2010
Jorgenson, Ho
and Stiroh
October 2002
Mann
March 2012
Title
“Information Technology
and US Productivity
Growth: Evidence from a
Prototype Industry
Production Account”
“Growth of US Industries
and Investments in
Information Technology
and Higher Education”
“Information Technology
Intensity, Diffusion, and
Job Creation”
Topic / Focus / Question
 Adapts previous growth
analysis into NAICS,
providing greater detail
on service industries
Geography /
Sectors Covered
ICT hardware,
software and
services
Time Period
1960-2007
 The period of 2000-07 broader spectrum of ICT-using industries.
 The replication of established technologies contributed to growth of capital and labor
inputs – specifically ICT hardware and software.
ICT equipment and
software
1977-2000
 Growth during this period was dominated by ICT investment and higher education.
 A jump in ICT investment, gains in employment of college-educated workers, and revival
of productivity growth account for resurgence of US economy since 1995.
 Incorporates ICT
industry involved with
production of equipment
and software
 References employment
dynamics of
establishments (different
sizes)
 Production of ICT equipment and software appeared highly volatile – boom 1995-2000,
bust, recovery 2000-07.
 The period of 1995-2000 was predominated by innovation and production of
semiconductors and semiconductor-intensive computers.
 Compare growth of ICTservice-producing
industries relative to
hardware manufacturing
 Outlines sources of
growth for US economy
Findings
 The spread of ICT equipment and software interacting with an educated workforce lead to
increased gains in output.
All sectors
2001-2009
 ICT-using sectors with above-average in ICT-intensity begin 3-times more ICT-intensive
and end up more than 4-times ICT-intensive as below-average sectors.
 There is a widening dispersion of ICT-intensity across various sectors.
 Examines intensity of
ICT hardware, software,
& services
 ICT producers make up a small part of economy, with about 3% of employment.
 Determines direct,
globalization, and social
surplus gains from ICT
service
 Small establishments that use ICT intensively account for 5% of overall employment.
 ICT-software and service establishments have added jobs on net. ICT remains a hot-bed of
entrepreneurship.
 Small ICT-intensive establishments accounted for 13-68% of economy-wide net job
change.
 ICT-intensive establishments in manufacturing and service sectors expand and contract
employment relatively more over the business cycle than non-ICT-intensive
establishments in the same industry.
 The direct and indirect gains of the US economy of lower ICT prices and increased ICTintensity is between $810 and $935 billion for the 2002-2007 period.
 The direct and indirect gains total is approximately $1T trillion in the US economy. There
is a broad-based use of information technology hardware, software and ICT-services.
70
Intel’s Economic Impacts on the US Economy, 2008 – 2012
Author /
Date
Mann
December
2003
Title
Topic / Focus / Question
“Globalization of ICT
Services and White Collar
Jobs: The Next Wave of
Productivity Growth”
 Determines the impact of
investment in
information technology
on prices, GDP,
employment in US
economy
 Diffusion of ICT
throughout US economy
 Measures impact of ICT
“package” (hardware,
software and businessservice applications)
 Examines globalization
of software and ICT
services
Tambe and
Hitt
November
2010
“Job Hopping,
Information Technology
Spillovers, and
Productivity Growth”
 Examines regional
differences in returns to
ICT investments
 Measures ICT spillovers
generated by ICT workers
 Determines
Network/spatial
proximity effects of ICT
Geography /
Sectors Covered
 All sectors
Time Period
1998-2003
 Measures ICT
intensity by
sector
(ICTEQ/FTE
rank)
 Globalized production and international trade made up 10-30% of the price decline in IT
hardware.
 Lower prices led to higher productivity growth and accumulated $230 billion in GDP
(1995-2002).
 ICT services and software made up 58% to 69% of ICT spending in 1993 and 2001,
respectively.
 Compares
durable
manufacturing
to construction
and health
sectors for
capital
expenditure per
employee
 California
counties
Findings
 Through the economic boom of 1990s, jobs that demanded ICT skills (not just ICTproducing firms) increased by 22%.
2006-2007
 4-digit SIC level
industries
 Firms with access to an external ICT pool that is one standard deviation larger than the
mean is associated with a substantial increase in output elasticity of own ICT investment.
Firms with relatively more access to ICT investments result in positive "spillover" effects.
 The output elasticity of ICT investment for non-durable goods manufacturing goods in
Northern California (a highly ICT intensive region) is 5% higher than firms in these
industries outside that region.
71
Intel’s Economic Impacts on the US Economy, 2008 – 2012
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72