Intel Invest in ATX

Intel puts deeper roots in Austin with office purchase
Chipmaker pays $39.8 million for 61 acres with five-story building that will double its current leased space.

By Kirk Ladendorf and Shonda Novak
AMERICAN-STATESMAN STAFF
Thursday, Dec. 2, 2010
Intel Corp. has bought the former Guaranty Bank headquarters on South MoPac Boulevard, a purchase that gives the company room to expand its engineering operations here and signals its intention to be a continuing major player in the area's community of high-tech companies.
"This signals that Intel is here to stay," Brad Beavers, Intel's site manager in Austin, said Thursday. "It is a long-term stake in the ground."
Intel bought the 61-acre property from the Federal Deposit Insurance Corp., which became the owner after regulators closed Guaranty Bank in August 2009. The FDIC put the building at 1300 S. MoPac Blvd. (Loop 1)
up for a sealed-bid auction earlier this year.
The FDIC said Intel paid $39.8 million for the property, which includes a five-story office building with nearly 389,000 square feet of space, along with 1,492 parking spaces.
The building has about double the space that Intel now leases in Austin.
Austin is the center of development for Intel's Atom family of low-power processors that go into small netbook computers and a widening variety of other products — everything from digital TV sets to consumer products and industrial gear.
The Guaranty site has room for potential expansion, but it is near Barton Creek, and past plans by Temple-Inland Inc. to expand their ran into opposition from environmental groups. Temple-Inland, Guaranty's former parent, currently leases 176,000 square feet in the building.
Beavers said Intel will begin moving workers to the new property sometime next year. He said some renovations will be required to adapt the building for chip engineering and laboratory space.
Most of Intel's 1,000 Austin employees work in leased offices along South MoPac, primarily in the Barton Skyway complex just across the freeway from the new building.
"We don't have space to expand where we are, and we need to expand," Beavers said.
Jamil Alam at Endeavor Real Estate Group, Intel's office broker in Austin, said the decision is good news for Austin.
"This investment represents a significant commitment to Austin by Intel, and these are great jobs for our city," Alam said. He said the opportunity to put its employees in a single site with room for growth "was simply too much" for Intel to pass up.
In addition, Intel's purchase is "a very positive sign for the overall Austin office market," and the Southwest sector specifically, Alam said.
Intel has operated an engineering center in Austin since the late 1990s, shifting its work here among various projects.
But around 2005, the company began to focus more of its Austin engineering work on what would become its Atom product line, a low-power chip family that runs the same software as Intel's tremendously popular processor chips that power personal computers.
Whereas PC processors have tended to grow faster and more powerful over time, Atom was designed from the start to be more suitable for lightweight, portable computers and other products.
Atom made a splash in 2008 when it became the chip of choice for netbook PCs. Analysts say the netbook trend may have peaked but that they expect to see Intel develop new versions of Atom for tablet computers, smart phones, digital TV set-top control boxes and hundreds of other consumer and industrial products.
Elinora Yoeli, who has headed the Atom development effort since the start, said Intel's investment in Austin is also a testament to the hard work and success of the engineering teams involved.
"It happens because people are passionate about it and there is a dream. We started small, but we have this passion, and now we see the results," Yoeli said. "We have become the experts in the company for low power."
Intel is one among several companies expanding chip design operations in Austin. Others include Advanced Micro Devices Inc., which now has more than 2,900 regular and contract workers here, up 19.8 percent this year.
Analyst Roger Kay with Endpoint Technologies Associates says Intel clearly is looking to do battle with the established powers in low-cost processors.
Expanding in Austin and elsewhere in the U.S., Kay said, also helps Intel score some political points for Intel, which has come under pressure from antitrust investigations and lawsuits.
"It wants to demonstrate its patriotism and to put some money down to show that Intel is a loyal American company and they want to continue to invest in America," he said.