Intel receives US$20 billion for chip production – 03/20/2024 – Market

Intel will receive $8.5 billion in direct financing and $11 billion in loans from the U.S. government to expand its ability to manufacture high-quality chips as it seeks to reinvent itself as a “national champion” in the industry and compete with companies such as Taiwan’s TSMC and South Korea’s Samsung.

US President Joe Biden will travel to Intel’s plant in Chandler, Arizona, on Wednesday to announce the package, which will go toward building new facilities for the company in the southwestern state, as well as in Ohio, New York. Mexico and Oregon.

Biden’s intervention in Arizona — one of the few swing states which will decide the US presidential election, pitting him against Donald Trump — comes as the Democratic president tries to boost his popularity.

Government funding for chip manufacturing, approved by Congress in 2022, is part of Biden’s broad agenda to revitalize domestic manufacturing in areas ranging from clean energy to semiconductors and steel.

At an event in Reno, Nevada, on Tuesday, Biden emphasized his economic achievements, contrasting them with those of his predecessor, saying he had created millions of jobs while Trump approved a big tax cut for the wealthy and wants to “undo everything what have we done”.

Intel has already committed to investing US$100 billion in chip manufacturing over the next five years. The company said it expects to further benefit from tax credits from the US Treasury that would allow it to deduct up to 25% of this investment.

The $8.5 billion will be distributed in installments, subject to Intel reaching certain “milestones,” White House officials said. They hope the funding will result in 30,000 jobs in the chip sector.

Officials said funds for Intel should begin arriving later this year once the deal is finalized.

In total, it is likely to constitute the largest grant of its kind made under the Chips and Science Act of 2022, which provided $52 billion in subsidies to shift semiconductor manufacturing back to the US amid geopolitical tensions with China .

Gina Raimondo, US Secretary of Commerce, told reporters that the grant would put the US on track to achieve its goal of ensuring that 20% of the world’s most advanced chips are manufactured in the US by the end of the decade.

The vast majority of high-quality semiconductors are currently manufactured by TSMC. The U.S. relies on “a very small number of factories in Asia for all of our most sophisticated chips,” Raimondo said, describing the situation as unsustainable from a U.S. economic and national security perspective.

Raimondo added that more concessions under the Chip Act would soon follow. TSMC and Samsung, which also operate facilities in the US, are awaiting their own subsidy packages.

Intel Chief Executive Pat Gelsinger called the announcement “a defining moment for the U.S. and Intel as we work to drive the next great chapter of American semiconductor innovation,” especially as the race to develop artificial intelligence requires increasingly powerful and sophisticated chips.

Since taking the helm of the company three years ago, Gelsinger has tried to restore the company’s leadership in the most advanced manufacturing processes while making it an attractive option for helping designers build their own chips that can also compete with those of Intel.

Gelsinger has become a vocal advocate for moving chip manufacturing back to the U.S. after decades of underinvestment. He said his goal is to ensure that 50% of all semiconductors in the world are manufactured in the US and Europe within a decade.

The new Chip Act funding will go primarily toward developing Intel’s 18A “node,” a reference to its manufacturing process for the smallest, most powerful chips. This marks the latest step in Gelsinger’s plan to develop five such nodes in four years.

In February, Microsoft revealed that it would be one of Intel’s first 18A manufacturing customers.