Biden administration in talks to award over $10 billion in subsidies to Intel Corp

The Biden administration is currently engaged in discussions to provide over $10 billion in subsidies to Intel Corp, as reported by Bloomberg News, citing sources familiar with the matter. These negotiations are ongoing and are likely to result in a package for Intel that includes both loans and direct grants, according to the report.

The administration's deliberations fall under the umbrella of the CHIPS Act funds, overseen by the U.S. Department of Commerce. Both the Department and Intel declined to provide comments on the matter.

CHIPS Act Program

The CHIPS Act program, with a total budget of $39 billion, aims to bolster semiconductor manufacturing in the United States. The Department of Commerce has already announced two smaller grants under this program, with Commerce Secretary Gina Raimondo indicating earlier this month that additional funding awards are expected within two months.

The subsidies from the semiconductor fund are intended to stimulate chip production and related supply chain investments, ultimately contributing to the construction of new factories and the expansion of production capacity.

Intel has outlined plans to invest tens of billions of dollars in chip factories at its existing sites in Arizona and New Mexico, as well as a new facility in Ohio, which the company envisions as potentially the world's largest chip plant. However, a recent Wall Street Journal report revealed that Intel may delay the completion of the Ohio site until 2026 due to a sluggish chip market and a gradual release of federal funding.

The impact of this year's influx of federal funding on Intel's and other semiconductor manufacturers' expansion plans remains uncertain. Taiwan Semiconductor Manufacturing Co., which has also applied for U.S. funding, has faced delays in the construction of its chip factory in Arizona.

In addition to Intel and Taiwan Semiconductor Manufacturing Co., other major players such as Micron and Samsung Electronics are undertaking the construction of new chip factories in the United States and are part of the applicants to the program.

The potential allocation of substantial subsidies to Intel reflects the U.S. government's commitment to strengthening domestic semiconductor manufacturing and enhancing its global competitiveness in the industry.

With the complexity and scope of semiconductor production necessitating significant investment, the outcome of these negotiations and the subsequent awards will undoubtedly have far-reaching implications for the U.S. semiconductor landscape and its position within the global market.