The head of Intel called on Tuesday for the U.S. government to provide tax credits or tax holidays for companies that build new factories here in order to promote jobs.

Paul Otellini said such policies would make the United States competitive with other countries, where costs are as much as $1 billion less to build and operate a semiconductor factory than in the United States.

Otellini said 90 percent of the difference in cost is down to tax and incentive policies rather than labor costs.

"We should offer tax credits or a five to 10 years tax holiday to companies, domestic or foreign, that want to set up factories in the US," he said, during a presentation at a Council on Foreign Relations event in New York.

Of Intel's nine chip wafer facilities around the world, six are in the United States, one is in Israel and two are in Ireland, which provides tax incentives to manufacturers.

Otellini said government incentives were part of the reason Intel was building a new chip making facility in Dalian, China.

Intel employs more than 80,000 people, including 45,000 in the United States.

It employs 1,300 directly for each of its chip factories and roughly the same number of jobs is created by suppliers and companies that maintain the equipment used in the factories, an Intel spokesman said.

Intel shares were about 2 percent higher Tuesday in New York trade, on a day when the stock market was up broadly.