The Biden administration announced Wednesday that it will give Intel nearly $20 billion in grants and loans as part of the CHIPS Act, significantly expanding the company’s domestic semiconductor production and making it the government’s largest subsidy for cutting-edge chip production. This will be the largest expense.
President Joe Biden is expected to announce a preliminary agreement for $8.5 billion in grants and up to $11 billion in loans for Intel in Arizona, with some of the funding to help build two new factories and modernize existing ones. used for
Commerce Secretary Gina Raimondo said this is a huge deal and one of the largest investments in U.S. semiconductor manufacturing in history.
“That means cutting-edge semiconductors made in the United States,” she said Tuesday, adding that the administration wants to increase the U.S. share of cutting-edge chip production from 0% to 20% by 2030 through a subsidy program. He said there was.
This historic spending shows the Biden administration is betting big on Intel as part of the CHIPS and Science Act of 2022. The bill would spend $52.7 billion to expand domestic semiconductor production, including $39 billion in subsidies for semiconductor production and $11 billion in subsidies for research and development. .
It could also help Biden, who has lagged behind his rival, former Republican President Donald Trump, in voters’ perceptions of the U.S. economy, win Arizona again in November’s presidential election. Democrats narrowly won swing states in the Southwest in 2020.
The purpose of the CHIPS Act is to reduce dependence on China and Taiwan, as the U.S. share of global semiconductor manufacturing capacity has declined from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association. Thing.
Lawmakers argue that the U.S.’s dependence on chips made in Taiwan by TSMC, the world’s top semiconductor contract manufacturing company, is a challenge because China claims the island as its own territory and reserves the right to use force to take it back. warned that it was dangerous.
Last month, the Biden administration invested $1.5 billion in GlobalFoundries, the world’s third-largest contract chip maker, to build a semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont. Gave.
The Department of Commerce announced in January that Microchip Technology won a $162 million government grant that will allow the company to triple production of mature-node semiconductor chips and microcontroller units at two U.S. factories. Announced.
Awards for South Korea’s Samsung and Taiwan’s TSMC are expected in the coming weeks. The Commerce Department has earmarked $28 billion in federal subsidies for advanced chip manufacturing (though more than $70 billion has been applied for) and also has $75 billion in lending authority.
Reuters first reported news of Biden’s visit to Arizona, which could help Democrats defend key seats in the Senate in November and possibly give a boost to two battleground races in the House. be.
Arizona was a source of pride for the Biden campaign in 2020, when it flipped the state for the first time in six presidential elections, but aides say it will be difficult to pull off a winning streak.
Benefits for Intel
The company also predicted in January that first-quarter sales could be more than $2 billion below market expectations as it grapples with uncertain demand for its chips used in the traditional server and personal computer markets. This is welcome news for Intel, who has been
In addition to Intel’s Arizona project, this funding will support Intel’s delayed state-of-the-art factory construction project in Ohio, a nearly completed advanced packaging facility in New Mexico, and a research and development facility in Oregon. The money will be used to provide funding.
Officials declined to provide details on how much money would go to each project.
In addition to the funding expected to be announced Wednesday, Intel is expected to receive up to $3.5 billion from the Commerce Department to strengthen security at its Arizona facility, which produces sensitive chips for the military.
“We are keeping our promise to bring manufacturing back to America and make America the leader in microchip production again,” Senate Majority Leader Chuck Schumer said Wednesday on the Senate floor. .
