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Intel will receive $8.5 billion in direct financing and $11 billion in loans from the US government to expand its cutting-edge chip manufacturing capacity, as it seeks to reinvent itself as a national champion in the sector and compete with the likes of Taiwan's TSMC and Intel Corp. South Korean Samsung.
US President Joe Biden will travel to Intel's site in Chandler, Arizona, on Wednesday to announce the package that will be allocated to building new facilities for the company in the southwestern state, as well as in Ohio, New Mexico and Oregon.
Biden's intervention in Arizona – one of the few swing states that will decide the US presidential election that pits him against Donald Trump – comes as the Democratic president tries to shore up his flagging approval ratings on the economy.
Government funding for chip manufacturing, approved by Congress in 2022, is part of Biden's sweeping agenda to revitalize domestic manufacturing in areas ranging from clean energy to semiconductors and steel.
During an event in Reno, Nevada, on Tuesday, Biden sought to emphasize his economic achievements and compare them with those of his predecessor, saying he had created millions of jobs while Trump approved a major tax cut for the wealthy and wanted to “undo everything we do.” I did”.
Intel has already committed to investing $100 billion in chip manufacturing over the next five years. It said it expects to benefit more from tax breaks from the US Treasury that will allow it to write off up to 25 percent of this investment.
Senior White House officials said the $8.5 billion would be distributed in tranches, provided Intel reaches certain “milestones.” They expect the financing to create 30,000 jobs in the chip sector.
Officials said the funds for Intel should start arriving later this year once the agreement is finalized. In all, it would likely constitute the largest grant of its kind made under the Chips and Science Act of 2022, which provides $52 billion in subsidies to help bring semiconductor manufacturing back to the United States amid geopolitical tensions with China.
US Commerce Secretary Gina Raimondo told reporters that the grant would put the United States on track to meet its goal of ensuring that 20 percent of the world's most advanced chips are manufactured in the United States by the end of the decade.
The vast majority of today's advanced semiconductors are manufactured by TSMC. Raimondo said the United States relies on “a very small number of factories in Asia for all of our most advanced chips,” something she called an untenable situation from a U.S. economic and national security perspective.
More grants under the CHIP Act will follow soon, Raimondo added. Both TSMC and Samsung, which also operate facilities in the US, are awaiting their own support packages.
Intel CEO Pat Gelsinger called it “a defining moment for the United States and Intel as we power the next great chapter in American semiconductor innovation,” especially as the race to develop artificial intelligence requires chips that are more powerful and advanced than ever before.
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Since taking over the company three years ago, Gelsinger has tried to regain the company's lead in more advanced manufacturing processes, while at the same time turning it into an attractive option for helping designers build their own chips, which might also compete with Intel.
Gelsinger has become a vocal advocate for bringing chip manufacturing back to the United States after decades of underinvestment. He said his goal is to ensure that 50 percent of all the world's semiconductors are manufactured in the United States and Europe within a decade.
Funding for the new chip law will be directed primarily toward developing Intel's “18A node,” referring to the process of manufacturing smaller, more powerful chips. This represents the latest step in Gelsinger's plan to develop five such “nodes” within four years.
In February, Microsoft revealed that it would be one of Intel's first 18A manufacturing customers.
