The U.S. Commerce Department and Intel have reached preliminary terms for the government to provide the company with $8.5 billion in direct financing to support projects to build or modernize semiconductor chip plants, officials announced on 20 of March
The funding announcement marks “the largest grant” to be made since the CHIPS and Science Act, US Commerce Secretary Gina Raimondo said during an event announcing the funding at Intel’s Ocotillo campus in Chandler, Arizona. The CHIPS Act, passed in 2022, established $52 billion to boost the U.S. semiconductor manufacturing sector, including $39 billion for construction.
“This investment will enable Intel to produce the world’s most sophisticated chips that will drive our economic and national security, power advanced technology, including artificial intelligence, the defining technology of our time,” Raimondo said.
The money would support Intel’s projects in Arizona, New Mexico, Ohio and Oregon, which the company says it expects will cost more than $100 billion combined and support nearly 20,000 construction jobs.
In addition to the direct financing, the preliminary non-binding memorandum of terms between Intel and the government would make up to $11 billion in loans available to Intel. The company says it also expects to claim an investment tax credit from the US Treasury Department that covers up to 25% of certain capital costs.
“We are building a future with geographically balanced and resilient supply chains,” Intel CEO Pat Gelsinger said at the Arizona event.
The projects are in different stages of progress. In Arizona, Intel is nearing completion of two new chip manufacturing plants, or “fabs,” as part of a project led by general contractor Hoffman Construction Co. at the Chandler site where officials gathered to announce the funding. The company also plans to modernize one of its existing factories at the site.
Intel also announced the reopening of a refurbished factory in Rio Rancho, NM, in January, and the company says it plans to upgrade two other factories there. And Intel also plans to expand and modernize its semiconductor chip development facility in Hillsboro, Oregon.
In Ohio, Intel is building two factories in Licking County, outside Columbus, with general contractor Bechtel. The first factory is scheduled to start operating next year. The company has also said it may build additional factories there in the future, though it did not single them out as projects supported by federal funding. Raimondo said last month that officials are prioritizing projects that will be online by 2030 for CHIPS Act money.
Intel is the fourth company official selected under the CHIPS Act program. Last month, Commerce Department officials said they had reached preliminary terms with GlobalFoundries to back three of its projects in New York and Vermont with $1.5 billion. Officials have also said they plan to provide BAE Systems Inc. with $35 million. for the modernization of a plant in New Hampshire and $162 million to Microchip Technology Inc. for major expansions in Colorado and Oregon.
CHIPS Act funding aims to increase the United States’ share of the global chip market, including a 20 percent share of cutting-edge chips not currently produced domestically. President Joe Biden has promoted the effort as important to both the economy and national security because of the chips’ widespread use and US reliance on their production overseas.
“Don’t forget we invented these chips,” Biden said during the Arizona event. “And over time, some thought it was cheaper to send manufacturing overseas because labor was cheaper. As a result, when the pandemic shut down chip factories overseas, prices everything increased”.
