US Finalizes $11B for Intel as Time Runs Out on Biden’s Chip Plan

(The Washington Post) -- The United States will give chipmaker Intel Corporation nearly $11 billion in federal grants to increase production of high-end semiconductors at American factories, as the Biden White House rushes to allocate money set aside for an ambitious tech stimulus before Donald Trump takes office.

Intel will receive $7.86 billion to build out its core manufacturing facilities, plus an additional $3 billion that was announced in September for projects with the Defense Department.

The awards are part of the Chips and Science Act, a law passed in 2022 with strong bipartisan support that allocates $52 billion in direct grants and potentially billions more in tax credits to incentivize tech companies to build more computer chip factories in America. The package was largely motivated by national security concerns about U.S. dependence on semiconductor suppliers in Asia.

The $7.86 billion grant is less than the $8.5 billion the White House initially announced for Intel in March. The reduction comes after Intel announced it would lay off 15,000 workers after posting a $1.6 billion quarterly loss in August. An Intel spokesperson said the decrease was due to the company winning the additional $3 billion related to its work with the Defense Department.

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The finalization of the massive grant underlines the importance of Intel to US efforts to build up a domestic chipmaking industry. The vast majority of US chip companies, including stock market hotshot Nvidia, do not manufacture their own chips, instead relying on factories in Taiwan and in particular the market leader Taiwan Semiconductor Manufacturing Company.

As geopolitical tensions rise with China, politicians from both major parties have said it’s vital for the United States to build out its own chipmaking capacity to reduce the risks of being cut off from the vital technology.

“The CHIPS for America program will supercharge American technology and innovation and make our country more secure - and Intel is expected to play an important role in the revitalization of the US semiconductor industry,” Commerce Secretary Gina Raimondo said in a statement.

The government expects Intel to put up $90 billion of its own money by the end of the decade to invest in chip production in the United States. The company is building and upgrading facilities in Arizona, Oregon, Ohio and New Mexico. The Intel announcement comes soon after the government finalized a $6.6 billion grant to TSMC for its facilities in Arizona.

Trump has echoed concerns about US dependence on overseas semiconductor manufacturing and said during his recent presidential campaign that Taiwan “stole our chip business.” He has also criticized the Chips and Science Act.

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“That chip deal is so bad, we put up billions of dollars for rich companies to come in and borrow the money and build chip companies here,” Trump said in October on the “Joe Rogan Experience” podcast.

Placing high tariffs on imported chips would be a better way to incentivize chip companies to move production to the United States, Trump said.