Intel Secures $7.865 Billion in CHIPS Act Funding to Boost U.S. Semiconductor Manufacturing

The U.S. Department of Commerce has allocated $7.865 billion to Intel under the CHIPS and Science Act, aiming to bolster domestic semiconductor production and strengthen supply chain resilience. This funding represents a significant milestone in America's strategy to reshore critical manufacturing industries.

Investment Focus

The funding will support Intel's projects in Arizona, New Mexico, Ohio, and Oregon, with a focus on advanced semiconductor manufacturing and packaging. These advanced packaging technologies integrate multiple chips into a single unit, vital for creating high-performance processors.

Intel CEO Pat Gelsinger highlighted the bipartisan support for these initiatives, stating:

“Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments.”

Intel’s Domestic Expansion

This funding is part of Intel’s broader $100 billion plan to enhance its U.S. manufacturing capabilities. Major projects include:

• Two new fabs in Arizona as part of the Intel Foundry business, launched to produce chips under contract.
• Two plants in Ohio costing up to $28 billion, although their production timeline has been delayed due to market challenges.
• Additional facility upgrades across multiple states.

The CHIPS Act and Economic Impact

Signed into law in 2022, the CHIPS Act is central to U.S. efforts to reduce dependency on foreign semiconductor suppliers, a vulnerability exposed by the pandemic. Besides the direct funding, Intel will benefit from a 25% investment tax credit and a $3 billion contract to manufacture advanced semiconductors for the U.S. government under a national security program.

White House Deputy Chief of Staff Natalie Quillian emphasized the broader goals:

“Today’s award marks another key step in implementing President Biden’s CHIPS and Science Act and the Investing in America agenda to reshore manufacturing, create thousands of good-paying jobs, and strengthen our economy.”

Challenges and Outlook

While Intel’s foundry business is expanding, it faces financial and regulatory challenges. Losses from its foundry operations widened last year, and a planned $5.4 billion merger with Tower Semiconductor was abandoned. However, Intel has pivoted to a strategic partnership with Tower, committing $300 million to provide manufacturing capacity.

With strong federal backing and a robust investment strategy, Intel is poised to play a pivotal role in advancing U.S. semiconductor capabilities and enhancing economic and national security.