The U.S. Department of Commerce has recommended a historic funding of approximately $20 billion for Intel Semiconductor Chip Factories, marking the government’s largest investment ever in U.S. semiconductor manufacturing. This funding, proposed under the CHIPS and Science Act of 2022, includes $8.5 billion in grants and $11 billion in loans, and aims to expand Intel’s semiconductor production and output.
According to senior administration officials, this investment will ensure the development and production of cutting-edge logic chips in the United States. These logic chips play a crucial role in advanced technologies like artificial intelligence (AI) and are essential for building critical military capabilities. The funding will be used to build two new factories and modernize an existing fabrication plant in Arizona, significantly increasing leading-edge logic capacity.
In addition to the factories in Arizona, the funds will also be used to establish a chipmaking ecosystem in Ohio and modernize two facilities in New Mexico to bridge a critical gap in the domestic semiconductor supply chain. Furthermore, Intel’s research and development facility in Oregon will also receive investment.
Commerce Department Secretary Gina Raimondo emphasized that this investment will create over 30,000 well-paying jobs and ignite the next generation of innovation. She stated that President Biden’s commitment to revitalizing American manufacturing is reflected in this massive step towards securing America’s leadership in manufacturing for the twenty-first century.
The announcement comes at a time when America’s share of leading-edge chip production has declined to zero, down from 37 percent in 1990 to 12 percent in 2020. However, Secretary Raimondo believes that with the government’s subsidy program, the share may rise to 20 percent by 2030. This investment is part of Washington’s efforts to reduce reliance on China and Taiwan, who have heavily invested in semiconductor research and development.
Intel CEO Pat Gelsinger expressed his enthusiasm for this investment, stating that it is a defining moment for both Intel and the U.S. He highlighted the importance of semiconductors in the digital revolution, particularly in the era of AI. Gelsinger believes that the support from the CHIPS Act will help Intel and the U.S. stay at the forefront of the AI era and build a resilient and sustainable semiconductor supply chain.
This announcement follows the Biden administration’s previous investments in the semiconductor industry. Last month, $1.5 billion was awarded to GlobalFoundries to build a semiconductor production facility in New York. Microchip Technology Inc. also received $162 million in federal funding to expand chip production. These investments aim to reduce U.S. dependence on foreign factories and strengthen domestic chip production.
The Commerce Department is expected to grant Intel an additional $3.5 billion to enhance security at its Arizona facilities for producing sensitive chips for the military.
Overall, this funding proposal from the Commerce Department underscores the government’s commitment to revitalizing American manufacturing and securing the nation’s leadership in semiconductor production. With significant investments in Intel’s factories, research and development, and chipmaking ecosystem, the U.S. aims to regain its position in leading-edge chip production and reduce dependence on foreign suppliers. This move not only creates jobs but also fuels innovation in crucial sectors such as AI, defense, and critical military capabilities.
