Intel To Receive Up To $8.5 Billion In CHIPS Act Grants As US Speeds Up Semiconductor Manufacturing Drive

The computer chip maker Intel will receive up to $8.5 billion in direct funding under the CHIPS and Science Act, as the Biden administration ramps up its effort to bring semiconductor manufacturing to US soil.

The preliminary memorandum of terms (PMT) signed with the US Department of Commerce, while non-binding, also grants Intel the opportunity to access federal loans totalling up to $11 billion for commercial semiconductor projects.

President Joe Biden traveled to Chandler, Arizona, the site of one of Intel’s new plants, on Wednesday (20 March) to officially announce the funding, which will be the 'single biggest contract' to any chip company under the act.

Intel also plans to claim the US Treasury Department's Investment Tax Credit of up to 25 per cent on some capital expenditures, according to the White House, which would significantly increase the amount of financial support it receives from the US government.

The tax credit is linked to a separate Biden administration policy — also adopted in 2022 — called the Inflation Reduction Act.

Intel has been a longstanding pillar of the US semiconductor sector, crafting chips that drive numerous PCs and data centre servers globally. It is the only American company that both designs and manufactures leading-edge logic chips.

Nevertheless, recent developments have seen Intel ceding its revenue crown to Nvidia, which is a leader in artificial intelligence chips. Furthermore, in a shifting landscape, competitors like AMD and Qualcomm have outstripped Intel in market capitalization, underscoring the evolving dynamics within the industry.

The proposed funding would help advance Intel’s critical semiconductor manufacturing and research and development projects at its sites in Chandler, Arizona; New Albany, Ohio; Rio Rancho, New Mexico; and Hillsboro, Oregon, where the company develops and produces many of the world’s most advanced chips and semiconductor packaging technologies.

CHIPS Act

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022 directs nearly $53 billion for semiconductor manufacturing and invests in future research and development, with another $24 billion worth of tax credits for chip production.

The recent funding announcement for Intel marks the fourth and most substantial agreement under this act.

In December 2023, the Biden Administration announced $35 million for BAE Systems Electronic Systems, supporting the modernisation of its Microelectronics Center in Nashua, NH, crucial for producing chips integral to US security, including those used in F-35 fighter jets.

Following this, in January 2024, the administration pledged $162 million to Microchip Technology Inc. to bolster its production of microcontroller units and other speciality semiconductors, as well as to aid the modernisation and expansion of fabrication facilities in Colorado and Oregon.

In February 2024, the Biden-Harris Administration allocated $1.5 billion to GlobalFoundries to bolster the development and expansion of facilities in Malta, New York, and Burlington, Vermont.

Wednesday's decision propels the US toward its goal of producing 20 per cent of the world’s leading-edge chips by the end of the decade, a significant leap from its current share of zero per cent.