Intel sparks benefits for region

Intel Corp.’s decision to set up shop in Fort Collins obviously has tangible benefits – a tenant for a vacant building, an employer for the recovering tech sector. But the company’s residence in Northern Colorado also carries with it many unseen effects.

Not only is the company picking up displaced workers, its also drumming up interest from other possible primary employers. Fort Collins has become the sole focus of an Intel competitor for its new design center – a move that industry experts say is not a coincidence.

Working up to closure of the deal for Celestica’s vacated building – and approval of numerous tax incentives-few details about Intel’s plans were made public. With the decisions made, the company’s intentions are solidifying.

Vacant space

When Celestica announced it would pull out of Fort Collins in March, it was a blow not only to the workers and the economy, but also to morale in the region.

Reports of a recovering national economy left Northern Coloradans with a sense that the worst was over. But losing a primary employer put a damper on the perceived upswing.

With numerous tech vacancies and myriad new-build options available, Intel’s search for space was closely monitored by the region’s communities. By selecting the Celestica building, Intel has shown that it is dedicated to Northern Colorado. The $10 million deal included the 200,000-square-foot building as well as the surrounding 30 acres.

There are now more than 350 Intel employees in Fort Collins, according to spokeswoman Judy Cara, and the company is hiring.

That number doesn’t come anywhere near the 900 Celestica employed during its peak. However, Celestica was involved with manufacturing at the Fort Collins facility, while Intel’s plans for the site are as a design facility only.

“There’s never been an intention for (a fabrication facility),” Cara said. “It’s not big enough for fab.”

Cara said that the Celestica manufacturing area could potentially become the lab for Intel’s design team engineers.

“Design teams don’t just sit in their cubes,” she explained. “They’re very hands-on.”

Details of the exact plans for the building or when the team might move in have not yet been released. Cara guessed that the company could move in during the fourth quarter.

With 30 acres – which have “no plans at all,” according to Cara – and a behemoth building, Intel could potentially expand to be the region’s largest employer.

By comparison, LSI Logic Corp. had as many as 800 employees at its 120,000-square-foot facility on Harmony Road – a building that is also on the market. Hewlett-Packard Co. recently announced it would consolidate its 650 employees at the Loveland campus into a 140,000-square-foot building.

The idealistic Itanium

Intel’s Fort Collins site will be the home to its Itanium design team. The company acquired about 250 employees on the team from Hewlett Packard in December 2004. Cara did not indicate that the Fort Collins site would house any other projects in the near future; for example, the highly touted partnership with Apple computers is based in Oregon.

Growth of the local site could hinge on the success of the Itanium, which has a checkered past.

When Intel and Hewlett Packard joined forces to develop the Itanium in 1994, the companies pronounced it the next-generation processor, which would remake the computer industry. By that time, the chip had already been in early development stages at HP for several years.

Early on, the chip created a buzz in the industry with IBM and Sun Microsystems Inc. creating products in line with the platform. Even Microsoft and Linux showed support.

However, the release of the first-generation Itanium was delayed from 1999 to 2000 and finally hit the market in 2001. Its performance received mediocre reviews, at best.

The last year was a difficult one for Intel on the Itanium front. Both Dell and IBM pulled away from Itanium servers. The company announced in October the delay of the next three Itanium chips – code-named Montecito, Montvale and Tukwila – by about a year.

But the company is not backing away from the technology.

“Intel has been resolute in backing it and seems likely to over the next decade,´ said Illuminata analyst Jonathan Eunice. “Most of the hard work has actually already been done, and the chip is, if slowly, gaining acceptance among large enterprises.”

Eunice said one of the major issues with the chip gaining market share is its high-end price. “It’s important that all but the lowest-end Itaniums sell for over $1,000, to $4,655 per chip,” he explained.  

Follow the leader

Despite some bumps in the road, Intel remains a respected industry giant. The $34 billion company’s decision to commit to Fort Collins is already garnering indirect benefits for the region.

The Northern Colorado Economic Development Corp. put a lot of work into making sure that Intel kept its employees in the region. The organization gathered what may amount to more than half a million dollars in incentives and tax breaks to court the company. And it’s paying off.

Advanced Micro Devices Inc., one of Intel’s tough competitors, held a job fair in Fort Collins in early January. A number of industry experts say it is common for competitors to locate near one another to take advantage of engineering talent.

“AMD has been considering locations with dynamic engineering talent pools for the last several months,´ said spokeswoman Jennifer Robenalt. “Fort Collins recently became a leading candidate as we began to understand the level of interest and talent in the area.”

The Sunnyvale, Calif.-based chipmaker is looking to establish an engineering design site that would initially employ several dozen engineers. Robenalt said the company expects that number to grow in time. The job fair attracted about 120 people during two days.

“At this time, Fort Collins is where we are focusing our attention,” Robenalt said.

In addition to the benefit of attracting attention from direct competitors, Intel is helping the Northern Colorado EDC market the area.

“We have one very advanced company evaluating several sites in the country for a headquarters,” Johnston explained. “Our region is by far the smallest of the sites.”

He was able to provide the company with a DVD that included Intel representatives explaining why they chose Fort Collins. Johnston said that the company representatives asked to speak with the Intel representatives after watching the video.

“Now we’re in the hunt,” Johnston said. “I don’t know if we’re in the final four, but we are in the top 10.”

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