Subsidies: Intel cashes in on the CHIPS Act
The early winner of the CHIPS war is Intel, said Eva Dou in The Washington Post. The Biden administration announced last week that the California-based chipmaker will “receive $8.5 billion in grants and $11 billion in loans to help it reshore some of its computer-chip production from overseas.” It’s the most money awarded yet out of the $52.7 billion CHIPS and Science Act, passed in 2022 to counter “a global chips shortage” and bring high-tech manufacturing back to the United States. Intel CEO Pat Gelsinger called the Biden effort to rebuild supply chains within America “the most important piece of industrial policy since World War II.” The CHIPS act got off to a slow start, but it’s gaining momentum, said Dylan Sloan in Fortune. “A lengthy application process” required that chipmakers “wade through months of red tape.” The money, though, is finally starting to flow. And “in one key way, the policy has already earned its worth” by attracting private-sector investment in chip production that “dwarfs the government’s stake.”
Sure, if you want to give the government credit for investments “that the private sector was already funding,” said Eric Boehm in Reason. “Intel was already planning to build” the new facilities to fill demand. For $8.5 billion in subsidies, Intel is creating 30,000 jobs—that’s $283,000 of taxpayer money per job created. The kicker is that “the math gets even worse if you read Intel’s press release, which clarifies that 20,000 of those 30,000 new jobs will be temporary construction jobs.”
Let’s see if Intel even gets the money, said Matt Cole and Chris Nicholson in The Hill. More likely, it will be “released in dribs and drabs” as long as they “prove they’re jumping through the appropriate hoops.” That’s because the CHIPS Act was “loaded with DEI pork.” For instance, “chipmakers have to make sure they hire plenty of female construction workers” and set “diverse hiring slate policies,” which sounds like code for quotas. Intel may find that these grants are mere “election-year stunts” that “will not be followed up.”
The CHIPS Act’s many strings “underscore the country’s competitive disadvantages,” said Karl W. Smith in Bloomberg. To qualify for the grants, chipmakers have to expand production capacity but “in a way that advances the Biden administration’s larger agenda,” fashioned around diversity and inclusion and unions. “Such goals may be worthwhile, but they increase manufacturing costs and make expanding production risky.” They also erode the notion that the semiconductor bill was about national security. “When the government money runs out,” or never arrives, U.S. manufacturers “may again turn to where labor is cheap and regulations are low.”