On Wednesday, President Biden plans to announce during a tour of battleground states geared toward selling his economic agenda that his administration will award up to $8.5 billion in grants to Intel, a significant investment geared toward boosting domestic semiconductor production.
Biden is predicted to make the announcement during a visit to Intel’s campus in the Phoenix suburb of Chandler, Arizona, White House officials said. The award, which will go toward the development and expansion of Intel facilities across the U.S., is the most important the federal government has awarded with funds from the CHIPS Act, which lawmakers passed in 2022 to help restore the U.S.’s leadership in semiconductor manufacturing .
The Biden administration, armed with $39 billion in distribution grants, is spearheading an ambitious effort to boost production of tiny chips that power all the pieces from smartphones to computers and cars. The effort is at the guts of Mr. Biden’s goal of reducing America’s dependence on foreign countries: Although semiconductors were invented in the United States, only about 10 percent of the world’s chips are produced domestically.
In addition to the grants, the federal government plans to provide up to $11 billion in loans to Intel with what the corporate has called generous terms. Intel can also be expected to seek federal tax credits that would cover 25 percent of expenses related to U.S. expansion projects, that are expected to cost greater than $100 billion over five years.
The grants are intended to help fund the corporate’s plans to build in Arizona, Ohio, New Mexico and Oregon. The projects are expected to create greater than 10,000 manufacturing jobs and about 20,000 construction jobs, according to Biden administration officials.
In Arizona, the cash will help finance the recent construction of two advanced Intel factories and the modernization of one other facility. The money will also help establish a completely recent facility near Columbus, Ohio, starting with two plants and marking the primary move to a brand new region of the United States in greater than 40 years.
In Rio Rancho, New Mexico, Intel will use federal funds to convert two factories into advanced packaging plants where chips are assembled to increase efficiency and reduce costs. The company will also expand and modernize its innovation center in Hillsboro, Oregon, which is predicted to strengthen the corporate’s technological leadership and the event of recent innovations.
Gina Raimondo, the Commerce Secretary, whose department oversees the distribution of the grants, said the award would help boost the country’s production of probably the most advanced semiconductors used in artificial intelligence, smartphones, supercomputers and probably the most sensitive military equipment. The United States currently produces none.
“For all of our most sophisticated chips, we use a very small number of factories in Asia,” Ms. Raimondo said on a call with reporters. “This is unsustainable and unacceptable. It’s an economic security issue, it’s a national security issue, and we’re going to change that.”
Ms. Raimondo said Intel’s award could be the most important single grant to a chipmaker under the brand new program. The investment will also help put the United States on target to produce about 20 percent of the world’s cutting-edge chips by the top of the last decade, she added.
Biden and his Democratic allies see semiconductor investments as a key way to change perceptions of the economy amongst voters in battleground states like Arizona.
“We haven’t talked to people about the issues President Biden is raising, and that’s what we’re committed to doing,” Arizona Democratic Party chairwoman Yolanda Bejarano said Tuesday, adding that Democrats will need to talk more in regards to the effects of semiconductor investments.
While Intel will need to hit certain milestones before the cash is distributed, senior Biden administration officials have said they expect funds to start flowing to the corporate before the top of this 12 months.
Patrick Gelsinger, Intel’s chief executive, told reporters at a briefing Tuesday night that the federal government incentives are a proud moment for his company and a significant achievement for politicians of each parties. While he was satisfied with the incentives earmarked for Intel, he said officials may have to invest more in the industry to reverse many years of investment shifting from the United States to Asian countries.
“You can’t fix this in one three- to five-year program,” Gelsinger said. “I think we’ll need at least CHIPS 2 to complete this task.”
Intel is the fourth company to receive a federal award under the brand new program, with total announced grants exceeding $10 billion. The first three grants – to GlobalFoundries, Microchip Technology and BAE Systems – were intended for makers of legacy chips, that are made in older manufacturing processes but are still used in many products resembling cars and dishwashers.
Biden administration officials are expected to announce more awards to other major chipmakers in the approaching months, including Taiwan Semiconductor Manufacturing Company, Samsung and Micron Technology. In recent years, these corporations have also made large investments in recent or expanded semiconductor manufacturing facilities in the United States.
The United States’ dependence on Asia for chips has develop into much more pronounced with the rise of artificial intelligence; almost the entire chips used to power the newest generative AI services were manufactured in Taiwan by TSMC, although they were designed by Silicon Valley company Nvidia.
Intel is trying to change that by developing recent manufacturing technology, starting to produce chips designed by other corporations and lobbying heavily for laws. The investment in Intel is meant to help U.S. corporations develop into leaders in the factitious intelligence industry by ensuring a domestic supply of advanced chips.
Intel will use about $50 million in federal funds to train and develop its employees. Many semiconductor corporations and industry groups have expressed concerns about potential shortages of technicians, engineers and other staff in all of the positions that will be created once the facilities are built.
Since Biden took office, private corporations have announced investments of greater than $240 billion in semiconductor and electronics manufacturing, according to administration officials. Some chipmakers, nevertheless, have encountered hurdles as they fight to expand their domestic production capability, resulting in delays.
