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Intel awarded up to $19.5 billion in grant, loan for US chip production

Award is largest by far from a fund meant to wean US from foreign dependence

President Joe Biden signs the CHIPS and Science Act of 2022 on the South Lawn of the White House.
President Joe Biden signs the CHIPS and Science Act of 2022 on the South Lawn of the White House. (Tom Williams/CQ Roll Call file photo)

The Biden administration chose chipmaker Intel Corp. for a federal grant of as much as $8.5 billion and a loan up to $11 billion to expand semiconductor manufacturing at the company’s facilities in Arizona, New Mexico, Ohio and Oregon.

The announcement, made public on Wednesday, is the largest award so far from a $39 billion fund that Congress appropriated in 2022 under the CHIPS and Science Act, which is intended to break the dependence on chip suppliers primarily based in Taiwan and South Korea for American missiles, spy satellites, telecom gear and medical devices.

The grant and loan “will help incentivize Intel to make over $100 billion worth of investments in manufacturing,” Commerce Secretary Gina M. Raimondo told reporters Tuesday. “It’s incredible how much private capital our grant is drawing forward, and this will mark one of the largest investments ever in U.S. semiconductor manufacturing.”

Intel plans to claim an investment tax credit of 25 percent of its total investment, Raimondo said. President Joe Biden is expected to travel to Intel’s facility in Chandler, Ariz., on Wednesday to announce the grant.

The funds will help Intel expand manufacturing of advanced semiconductor chips as well as packaging them, which involves embedding them in metal, plastic, ceramic or glass for use in various components. The money is expected to create as many as 10,000 manufacturing jobs at those plants and another 20,000 construction jobs in the four states, the Commerce Department said in a statement.

The $8.5 billion award to Intel is the single largest grant to a chipmaker under the Commerce Department program, a senior department official speaking on condition of anonymity told reporters. Officials did not discuss the basis for selecting the company, other than noting that Intel will be the first in the program to build chips that will be among the thinnest and tiniest in the world, which the company has labeled 18A. They are likely to drive the next generation of computing power critical to artificial intelligence and military applications, Raimondo said.

Other companies previously chosen for grants include GlobalFoundries, which is slated to receive $1.5 billion for expanding its facilities in Malta, N.Y., and Burlington, Vt.; $162 million to Microchip Technology Inc. to modernize facilities in Colorado Springs, Colo., and Gresham, Ore.; and $35 million to BAE Systems in Nashua, N.H., to make chips used in military applications.

These grants are for so-called legacy chips, officials said.

Wednesday’s announcement marks a preliminary agreement between the U.S. government and Intel. The first tranche of funds is expected to flow by the end of the year, after the Commerce Department certifies that Intel has met certain milestones, the official said.

The department has received hundreds of grant applications from other top chipmakers as well, including IBM, Samsung, and Taiwan Semiconductor Manufacturing Co. The companies have indicated they may invest as much as $400 billion in the U.S. provided they get support from the government.

The department has been taking applications from medium-sized suppliers of material and equipment to semiconductor makers as well.

These supply-chain projects may involve construction, expansion, modernization of facilities, as well as equipment, chemicals, gasses or other materials essential to the manufacturing process.

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