Thursday, April 25

Intel receives $8.5 billion in grants to build chip factories

President Biden on Wednesday awarded $8.5 billion in grants to Intel, a major investment to bolster domestic semiconductor production, during a tour of battleground states intended to sell his economic agenda.

Speaking from Intel’s Chandler, Ariz., campus, Biden said the award would support thousands of new manufacturing jobs, including those that don’t require a college degree.

“This will transform the semiconductor industry,” Mr. Biden said. “Where the hell is it written that we’re no longer going to be the manufacturing capital of the world?”

The award, which will go toward the construction and expansion of Intel’s U.S. facilities, is the largest ever awarded by the federal government thanks to funding from the CHIPS Act, a law passed in 2022 to help re-establish the United States as leader. in semiconductor manufacturing.

The Biden administration, with $39 billion in grants to distribute, is spearheading an ambitious effort to speed up production of the tiny chips that power everything from smartphones to computers and cars. The effort is central to Mr. Biden’s goal of reducing America’s dependence on foreign countries: Although semiconductors were invented in the United States, only about 10% of chips world are manufactured in the country.

“Almost all advanced chip manufacturing in the entire industry moved to Asia years ago,” Mr. Biden said. “That’s why today’s investment is so important: we will enable advanced semiconductor manufacturing to make a comeback here in America.”

In addition to the grants, the federal government plans to provide Intel with up to $11 billion in loans, which the company called generous terms. Intel is also expected to claim federal tax credits that could cover 25% of expenses related to its U.S. expansion plans, which are expected to cost more than $100 billion over five years.

The grants are intended to help fund the company’s construction projects in Arizona, Ohio, New Mexico and Oregon. The projects are expected to create more than 10,000 manufacturing jobs and about 20,000 construction jobs, according to Biden administration officials.

Commerce Secretary Gina Raimondo, whose department oversees the distribution of the grants, said the award would help accelerate the country’s production of the most advanced semiconductors, used in artificial intelligence, smartphones, supercomputers and the most sensitive military equipment. The United States currently produces none.

Ms. Raimondo said the Intel award would be the largest grant awarded to a chipmaker under the new program. The investment will help the United States produce about 20% of the world’s cutting-edge chips by the end of the decade, she said.

“This investment will enable Intel to produce the world’s most advanced, cutting-edge chips that will power our economic and national security,” Raimondo said on the Intel campus Wednesday.

In Arizona, the money will help finance Intel’s recent construction of two advanced factories and the upgrade of another facility. The money will also establish an entirely new location near Columbus, Ohio, starting with two factories, in its first move to a new U.S. region in more than 40 years.

In Rio Rancho, New Mexico, Intel will use federal funds to transform two factories into advanced packaging facilities, where chips will be assembled together to improve performance and reduce costs. The company will also expand and modernize an innovation center in Hillsboro, Oregon, which is expected to strengthen the company’s technology leadership and development of new innovations.

Mr. Biden and his Democratic allies view investments in semiconductors as a key way to try to change perceptions of the economy among voters in conflict states like Arizona.

“We haven’t talked to people about the issues that President Biden solved, and that’s what we’re determined to do,” Yolanda Bejarano, chairwoman of the Arizona Democratic Party, said Tuesday, adding that Democrats should talk more. on the effects of investments in semiconductors.

Although Intel must meet certain milestones before the money is distributed, senior Biden administration officials have said they expect funds to start flowing to the company by the end of this year.

Patrick Gelsinger, Intel’s chief executive, told reporters at a news briefing Tuesday evening that the government incentives represented a proud moment for his company and a bigger achievement for politicians in both parties. While pleased with the incentives aimed at Intel, he said officials may need to invest more in the industry to end decades of shifting investment from the United States to countries in Asia.

“This problem cannot be solved in a single three- to five-year program,” Mr. Gelsinger said. “I think we will need at least one CHIPS 2 to complete this work.”

Intel is the fourth company to receive a federal award under this new program, bringing the total announced grants to more than $10 billion. The first three grants – to GlobalFoundries, Microchip Technology and BAE Systems – were for makers of existing chips, created with older production processes but still used in many products like cars and dishwashers.

Biden administration officials are expected to announce additional awards in the coming months to other major chipmakers, including Taiwan Semiconductor Manufacturing Company, Samsung and Micron Technology. These companies have also made major investments in new or expanded semiconductor manufacturing plants in the United States in recent years.

The United States’ dependence on Asia for its chips has become even more pronounced with the rise of artificial intelligence. Almost all of the chips used to power the latest generative AI services have been made in Taiwan by TSMC, although designed by Silicon Valley company Nvidia.

Intel has attempted to change this situation by developing new manufacturing technologies, starting to make chips designed by other companies, and lobbying for legislation. The investment in Intel aims to enable American companies to become leaders in the AI ​​sector by ensuring the existence of a domestic supply of advanced chips.

About $50 million in federal funding will be set aside for Intel to train and develop “a new generation of workers for the semiconductor industry,” Biden said. Many semiconductor companies and industry groups have expressed concerns about a possible shortage of technicians, engineers and other workers to fill all the positions that will be created once the facilities are built.

In total, private companies have announced more than $240 billion in investments in semiconductor and electronics manufacturing since Mr. Biden took office, according to administration officials. Some chipmakers, however, have faced obstacles when trying to expand their domestic manufacturing capacity, leading to delays.