President Biden on Wednesday awarded $8.5 billion in grants to Intel, a major investment to boost the nation’s semiconductor manufacturing, during a tour of battleground states to sell his economic agenda.
Speaking from Intel’s campus in Chandler, Ariz., Mr. Biden said the award would support thousands of new manufacturing jobs, including those that don’t require a college degree.
“It will transform the semiconductor industry,” Mr. Biden said. “Where the hell does it say we’re not going to be the manufacturing capital of the world again?”
The award, which will go to the construction and expansion of Intel facilities in the United States, is the largest the federal government has made with funding from the CHIPS Act, which lawmakers passed in 2022 to help restore the U.S. States as a leader. in semiconductor manufacturing.
The Biden administration, armed with $39 billion in subsidies to distribute, is leading an ambitious effort to ramp up production of the tiny chips that power everything from smartphones to computers to cars. The effort is at the heart 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 made domestically.
In addition to the grants, the federal government plans to give Intel up to $11 billion in loans on generous terms that the company described. Intel is also expected to claim federal tax credits that could cover 25 percent of the cost of its US 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 projects in Arizona, Ohio, New Mexico and Oregon. According to Biden administration officials, the projects are expected to create more than 10,000 manufacturing jobs and about 20,000 construction jobs.
In Arizona, the money will help finance Intel’s recent construction of two advanced factories and the modernization of another facility. The money will also help establish an entirely new location near Columbus, Ohio, starting with two plants, in its first move into a new U.S. region in more than 40 years.
In Rio Rancho, NM, Intel will use federal funds to convert two factories into advanced packaging facilities, where chips are assembled to improve performance and reduce costs. The company will also expand and modernize an innovation hub in Hillsboro, Ore., which is expected to advance the company’s technology leadership and the development of new 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 the most advanced semiconductors, used in artificial intelligence, smartphones, supercomputers and the most sensitive military hardware. . . The United States currently produces none.
“This investment will enable Intel to produce the world’s leading, most advanced chips that will power our economic and national security,” Ms. Raimondo said at Intel’s campus on Wednesday.
Ms. Raimondo said the Intel award would be the single largest grant to a chipmaker under the new program. The investment will also help the United States produce about 20 percent of the world’s top chips by the end of the decade, he said.
Mr. Biden and his Democratic allies see investment in semiconductors as a key way to try to turn around perceptions of the economy among voters in battleground states like Arizona.
“We haven’t talked to people about the issues that President Biden has given, and that’s what we’re determined to do,” Yolanda Bejarano, chairwoman of the Arizona Democratic Party, said Tuesday, adding that Democrats should speak up more. on the effects of semiconductor investments.
Although Intel will have to meet certain milestones before the money is distributed, senior Biden administration officials have said they expect funds to begin flowing to the company by the end of this year.
Patrick Gelsinger, Intel’s chief executive, told reporters at a briefing Tuesday afternoon that the government incentives represented a proud moment for his company and a major achievement for politicians of both parties. While pleased with the incentives intended for Intel, he said officials may need to invest more in the industry to reverse decades of investment shifting from the United States to Asian countries.
“It doesn’t get fixed in a three- to five-year plan,” Mr. Gelsinger said. “I think we’ll need at least a CHIPS 2 to get this job done.”
Intel is the fourth company to receive a federal award under the new program, bringing total announced grants to more than $10 billion. The first three grants — to GlobalFoundries, Microchip Technology and BAE Systems — involved makers of legacy chips, which are made with older manufacturing processes but are still used in many products such as cars and dishwashers.
Biden administration officials are expected to announce more awards in the coming months to other major chip makers, including Taiwan Semiconductor Manufacturing Company, Samsung and Micron Technology. These companies have also made significant investments in new or expanded semiconductor manufacturing facilities in the United States in recent years.
The United States’ dependence on Asia for its chips has become even more acute with the rise of artificial intelligence. almost all of the chips used to power the latest production AI services were made in Taiwan by TSMC, although they were designed by Silicon Valley firm Nvidia.
Intel is trying to change that by developing new manufacturing technology, starting to make chips designed by other companies, and lobbying hard for legislation. The investment in Intel is intended to help US companies take a leading position in the artificial intelligence industry by ensuring there is a domestic supply of advanced chips.
About $50 million in federal funding will be available for Intel to spend on training and developing its workforce. Many semiconductor companies and industry groups have raised concerns about potential shortages of technicians, engineers and other workers to fill all the positions that will be created once the facilities are built.
In total, private companies have announced more than $240 billion in semiconductor and electronics investments since Mr. Biden took office, according to administration officials. Some chipmakers, however, have faced obstacles while trying to expand their domestic production capacity, resulting in delays.
