Intel to get $8.5 billion to build chip plants

WASHINGTON>> President Joe Biden plans to announce on Wednesday that his administration will award up to $8.5 billion in grants to Intel, a major investment to bolster the nation’s semiconductor production, during a tour of battleground states meant to sell his economic agenda.

Biden is set to make the announcement during a visit to the Intel campus in the Phoenix suburb of Chandler, Ariz., White House officials said.

The award, which will go to the construction and expansion of Intel facilities around the United States, is the biggest the federal government has made with funding from the CHIPS Act, which lawmakers passed in 2022 to help reestablish the United States as a leader in semiconductor manufacturing.

The Biden administration, equipped with $39 billion in subsidies to distribute, is spearheading an ambitious effort to ramp up production of the tiny chips that power everything from smartphones to computers and cars.

The effort is at the center of Biden’s goal to reduce America’s reliance on foreign countries: Although semiconductors were invented in the United States, only about 10% of the world’s chips are made domestically.

In addition to the grants, the federal government is planning to award Intel up to $11 billion in loans on what the company characterized as generous terms. Intel is also expected to claim federal tax credits that could cover 25% of the expense of its U.S. expansion projects, which are expected to cost more than $100 billion over five years.

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

Gina Raimondo, the secretary of commerce, whose department is overseeing the distribution of the grants, said the award would help ramp up the country’s production of the most advanced semiconductors, which are used in artificial intelligence, smartphones, supercomputers and the most sensitive military hardware. The United States currently produces none.

“We rely on a very small number of factories in Asia for all of our most sophisticated chips,” Raimondo said during a call with reporters. “That’s untenable and unacceptable. It’s an economic security problem, it’s a national security problem, and we’re going to change that.”

Raimondo said the Intel award would be the single largest grant to a chipmaker under the new program. The investment will also help put the United States on track to produce roughly 20% of the world’s leading-edge chips by the end of the decade, she said.

Biden and his Democratic allies view the semiconductor investments as a key way to try to turn around perceptions of the economy among voters in battleground states such as Arizona.

“We have not been talking to folks about the issues that President Biden has been delivering on, and that’s what we are determined to do,” Yolanda Bejarano, the Arizona Democratic Party chair, said on Tuesday, adding that Democrats would need to talk more about the effects of the semiconductor investments.

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

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