The Biden administration on Wednesday said it is awarding Intel nearly $20 billion in grants and loans as part of the CHIPS Act, supercharging the company’s domestic semiconductor output and marking the government’s largest outlay to subsidize leading-edge chip production.
President Joe Biden will announce the preliminary agreement for $8.5 billion in grants and up to $11 billion in loans for Intel in Arizona, where some of the funding will be used to build two new factories and modernize an existing one.
Commerce Department Secretary Gina Raimondo called it a huge deal and one of the largest investments ever in US semiconductor manufacturing.
“It means leading-edge semiconductors made in the United States of America,” she said Tuesday, noting that the administration hopes to increase the United States’ share of leading-edge chip production from 0% to 20% by 2030 through the subsidy program.
The historic outlay shows the Biden administration is betting big on Intel as part of the 2022 CHIPS and Science Act, a bid to boost domestic semiconductor output with $52.7 billion in funding, including $39 billion in subsidies for semiconductor production and $11 billion for research and development.
It could also help Biden, who lags rival former Republican President Donald Trump in voter perceptions of the US economy, to again take Arizona in November’s presidential election. The Democrat narrowly won the Southwestern swing state in 2020.
The goal of the CHIPS Act is to reduce reliance on China and Taiwan, as the share of global semiconductor manufacturing capacity in the US has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association.
Lawmakers have warned that US dependence on chips manufactured in Taiwan by the world’s top contract chip manufacturer TSMC is risky because China claims the island as its territory and has reserved the right to use force to retake it.
Last month, the Biden administration awarded $1.5 billion to GlobalFoundries, the world’s third-largest contract chipmaker, to build a semiconductor production facility in Malta, NY, and expand existing operations there and in Burlington, Vt.
In January, the Commerce Department announced Microchip Technology would get $162 million in government grants, allowing the company to triple production of mature-node semiconductor chips and microcontroller units at two US factories.
Awards for South Korea’s Samsung and Taiwan’s TSMC are expected in the coming weeks. The Commerce Department is dedicating $28 billion for government subsidies for advanced chip manufacturing — although it has more than $70 billion in requests — and also has $75 billion in lending authority.
Reuters first reported news of Biden’s Arizona trip, which could also help Democrats defend a critical Senate seat in November and possibly provide a boost in a pair of competitive House of Representatives races.
Arizona was a point of pride for Biden’s 2020 campaign, which flipped the state for the first time in six presidential elections, but his aides see delivering a repeat victory as a tall order.
Boon for Intel
It is also welcome news for Intel, which in January forecast first-quarter revenue could miss market estimates by more than $2 billion, as it grapples with uncertain demand for its chips used in the traditional server and personal computer markets.
In addition to Intel’s Arizona projects, the money will help fund Intel’s delayed leading-edge factory construction project in Ohio, a nearly complete advanced packaging facility in New Mexico, and a research and development facility in Oregon.
Officials declined to detail how much money would flow to each project.
In addition to the funds slated to be announced on Wednesday, Intel is expected to receive as much as $3.5 billion from the Commerce Department to boost security at its Arizona facilities to produce sensitive chips for the military.
“We’re keeping our promise of bringing manufacturing back to America and making the United States the leader in microchip production once again,” Senate Majority Leader Chuck Schumer said in remarks on the Senate floor on Wednesday.
Source
