Home' Technology Review : May June 2010 Contents Q&A
As CEO of Intel, Paul Otellini knows
a lot about the value of investments.
And these days he’s worried that the
United States, after a decade of neglect-
ing support for education, research, and
digital infrastructure, is falling behind
much of the world in its ability to com-
pete economically and technologically.
Last year, during some of the grimmest
days of the recession, Otellini announced
that Intel would spend $7 billion to build
fabrication plants in Oregon, New Mex-
ico, and Arizona. While the move was
meant to create manufacturing capac-
ity for its new 32-nanometer chips, the
timing, which came as Congress debated
President Obama’s stimulus bill, was also
meant to signal its willingness to invest in
the United States. This February, Otellini
announced that Intel and a group of
venture capital firms would supply $3.5
billion to U.S . -based technology startups
over the next 18 to 24 months; a related
initiative committed Intel and other
high-tech companies to doubling their
hiring of U.S . college graduates in 2010.
Fretting over U.S. competitiveness
is nothing new: such concerns seem to
make headlines every few years, peaking
during poor economic times. So Technol-
ogy Review editor David Rotman asked
the Intel CEO why he is worried now.
TR: Why does it matter where innovation
comes from? After all, about 75 percent of
your revenues are from outside the U.S .
Otellini: [To us] as a global company, it
probably doesn’t matter. And as a multi-
national corporation, we have the ability
to hire people from any where on earth.
But there are still some fundamental
concerns. I think that America is the best
place in the world for innovation when it
Is the U.S . losing its competitive edge? Intel’s boss thinks so.
Photograph by GABRIELA HASBUN
is done right. Historically, the infrastruc-
ture, capital markets, acceptance of fail-
ure, and the willingness to try again are
What’s at stake for the U.S .?
As a country the issue is: are we going
to be prepared for the industries of the
21st century, which are fundamentally
knowledge-based industries? The alterna-
tive is to go back to 19th-century indus-
tries and get back to [manufacturing] steel
and those kinds of things, but then you
have to do it at costs that are comparable
with the lowest costs in the world. That
would require a reset of the standard of
living, and most Americans are not will-
ing to do that. If you want to maintain our
standard of living, you need to adapt the
workforce for the jobs of the future.
Do you see signs of this loss of competi-
You can measure the gradual erosion
with something as straightforward as
how our kids are doing in math and sci-
ence. It’s clear the best of the best coming
out of our schools are world class. It is the
average that I’m concerned about.
Has this begun affecting the U.S. economy?
It is so hard to tell. If we didn’t have
this giant recession, you might be able
to measure [the effect] more accurately.
But you can surmise that if the quality of
skills of the workforce is eroding, it’s a
huge productivity loss.
What government policies would help?
Governments are best positioned to
fund basic research. But there’s been a
decade-long erosion in the amount of
that funding. It’s now on a path to grow,
and eventually the goal is to double it. But
it takes a long time to do that. Secondly,
we would like to see the R&D tax credit
made permanent and returned to levels
that are competitive with the rest of the
world. Lastly, we have corporate tax rates
that today are the second highest in the
Aren’t there dangers when governments
get involved in supporting innovation?
One potential pitfall is government
picking industries and technologies.
The job of government is to fund basic
research and let scientists do their work
and let the innovation fall where it may.
I just think there has been insufficient
funding, and we need to get it back to
levels that are much more consistent with
our historical norms.
Investing in st artups is what venture
capit alists are supposed to be doing. Why
did they need encouragement?
Yes, it is their business, but the narrow-
ness of the focus [on clean tech and high
tech] and the narrowness of the invest-
ment period was also important. We
wanted to show [startup companies] that
the venture capital industry was open for
One of your recent speeches was titled
“Reinventing Americ a’s Economic Future.”
What did you mean?
The fifty-thousand-foot view is, it’s all
about competitiveness. It is something
that, as a country, we too often take for
granted. We take for granted that capital
will flow in, we take for granted that we
will have the best workforce in the world,
we take for granted that capital formation
is there, that startups can have an exit
through the IPO [initial public offering]
market. None [of that] is to be taken for
granted anymore. It was nurtured over 30
to 40 years, and for a variety of reasons it
has either atrophied or been constrained.
If we refocus our energies on competi-
tiveness as a country, then other good
things accrue: capital accrues, jobs accrue,
investments accrue. It’s really a recipe for
what makes nations prosperous.
May10 Q&A 34
4/6/10 12:17:11 PM
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