Intel is set to receive up to $8.5 billion in direct funding and $11 billion in loans for commercial semiconductor projects under the CHIPS and Science Act. The announcement marks a significant development in the Biden administration’s stated commitment to revitalising the nation’s semiconductor industry.
“This marks a defining moment for the US and Intel as we strive to fuel the next chapter of American semiconductor innovation,” remarked Intel CEO Pat Gelsinger. “In an era where artificial intelligence is revolutionising the digital landscape, the support from the CHIPS Act will play a pivotal role in ensuring Intel and the US remain at the forefront of this transformative era.”
Growing the US semiconductor industry
The funding announcement comes as part of a broader strategy to bolster the nation’s semiconductor industry, with Intel’s investment representing one of the largest public-private partnerships in the sector. Notably, Intel has previously outlined plans to inject over $100 billion into the US over the next five years, further solidifying its commitment to domestic semiconductor manufacturing and research.
The CHIPS Act funding initiative seeks to enhance US semiconductor manufacturing and research capabilities, with a particular focus on advancing leading-edge semiconductor technologies. Intel is the sole American company engaged in both the design and manufacturing of logic chips. The investment is poised to propel Intel’s semiconductor manufacturing and research endeavors forward, particularly across its facilities in Arizona, New Mexico, Ohio, and Oregon.
Semiconducturs have become a key battleground in the trade war between the US and China, with Washington imposing increasingly stringent export controls on businesses which make and sell components in the Far East, in a bid to control China’s technological and military capabilities. This has also been reflected in renewed efforts to bolster domestic chip manufacturing R&D, reducing dependency upon foreign hardware and intellectural property. Microelectronics association SEMI recently voiced concerns regarding the impact similar curbs by the EU might have on the continent’s chip industry.
The next generation of innovation
US Secretary of Commerce Gina Raimondo hailed the agreement as a monumental step towards securing America’s leadership in manufacturing. “With this agreement, we are incentivising over $100 billion in investments from Intel,” she stated. “This historic investment will create over 30,000 jobs and ignite the next generation of innovation, reinforcing our nation’s position as a global technology leader.”
Under the conditions of the non-binding preliminary memorandum of terms (PMT) signed between the US Secretary of Commerce and Intel, the manufacturer will also have the option to access federal loans totaling up to $11 billion. Additionally, the company intends to leverage the US Treasury Department’s Investment Tax Credit (ITC), which could amount to 25% of qualified investments exceeding $100 billion over five years. However, the finalisation of the direct funding award and federal loans is contingent upon due diligence, negotiation of long-form term sheets, and the achievement of specified milestones.
