The Biden administration said Tuesday that it would award up to $7.86 billion in direct funding to Intel, with the U.S. chip giant set to receive at least $1 billion of that money before the end of the year.
The money is a reduction from Intel’s preliminary award of $8.5 billion, which President Biden announced during a visit to the company’s Arizona plant in March. The Commerce Department said it had reduced Intel’s grant because the chip maker, the biggest recipient of money under the CHIPS Act, also received a $3 billion contract to make semiconductors domestically for the military.
But the Commerce Department also detailed in a project document that Intel, which is under financial pressure because of a sales slump, had extended timelines for some projects beyond a 2030 government deadline.
The company now plans to invest $90 billion in the United States by the end of the decade, after previously saying it would spend $100 billion over the next five years. It also reduced the estimated jobs it would create in Ohio, where it will require 3,500 fewer employees than the 10,000 it previously estimated, the Commerce Department said.
Commerce and Intel officials said those changes weren’t a factor in the final award.
Intel’s shifting timeline and jobs projections speak to the challenges the Biden administration has run into as it tries to rev up domestic chip-making. The CHIPS Act, a bipartisan bill passed in 2022, provided $39 billion to subsidize the construction of facilities to help the United States reduce its reliance on foreign production of the tiny, critical electronics that power everything from dishwashers to iPads.
Nailing down its CHIPS award has been a priority for Intel, which last month reported the biggest quarterly loss in the company’s 56-year history. It has been cutting costs and fending off takeover interest from rivals, after the total value of the company fell to around $107 billion, from $500 billion in 2000. (Other chip makers have also been facing challenges, because of a cyclical slump in the industry.)
Gina M. Raimondo, the secretary of commerce, called the award a “huge step forward in strengthening the U.S. semiconductor supply chain.”
“After a 30-year dip, the industry is coming back, and these facilities are going to fundamentally change chip manufacturing and the strength of the chip industry in the U.S.,” she said.
The Commerce Department has been rushing to firm up awards with companies and begin distributing the funds before the Trump administration takes office in January. Including Intel, it has now completed terms with six companies, to distribute more than $19 billion of the $39 billion it has to give out.
Ms. Raimondo said more awards would be on the way in coming weeks. The government will hand out the funds to the companies as they hit certain milestones, like finishing construction or producing wafers.
The Biden White House says the United States is now on track to produce 30 percent of the world’s leading-edge chips by 2032.
Intel is the only U.S.-based company that manufactures leading-edge logic chips, and it has been central to the Biden administration’s plans of revitalizing the industry. The company’s recent financial struggles have stoked concern among some government officials and lawmakers, who want to support the company but also ensure that taxpayer money isn’t wasted.
The Commerce Department said Intel was still on track to invest the full $100 billion it had previously committed to spend on projects in Arizona, New Mexico, Ohio and Oregon. But the department was focused on funding investments that would occur before the end of the decade, which would be $90 billion of the total.
The department said Intel would receive nearly $3.94 billion for its projects in Arizona, $500 million for New Mexico, $1.5 billion for a major factory in Ohio and $1.86 billion for Oregon.
In Ohio, the Commerce Department said, it will fund the first of two chip-making plants the company is building there; materials released by the department in March had discussed funding both plants. The first plant in Ohio is now expected to be operational before the end of the decade, a delay from the company’s initial goal of starting production there in 2025.
The post Biden Cuts Intel’s Chip Award by More Than $600 Million appeared first on New York Times.
