This morning, the Biden administration announced that Intel and the U.S. Department of Commerce have signed a non-binding preliminary memorandum of terms for up to $8.5 billion in direct funding for commercial semiconductor projects under the CHIPS and Science Act. Now, these agreements don't hold any legal water, and more-or-less are symbolic of the two parties' intent to make it binding.
The funding would go towards Intel's semiconductor manufacturing and R&D projects in Arizona, New Mexico, Ohio and Oregon, where the company makes chips and semiconductor packaging technologies. Intel is the only American company that designs and manufactures these logic chips. The funding is part of what the CHIPS Act was designed to accomplish: increase domestic semiconductor manufacturing capabilities and build a more resilient U.S. supply chain.
Most Read on IEN:
- Can the World’s Largest Plane Save Wind Power?
- Unilever to Cut 7,500 Jobs
- Podcast: GM Tattles on Drivers, Weird Chinese EVs, CEO Sells Fake Implants
- Podcast: Gen Z is a Sustainability-First Generation
The latest surge in chip demand stems from recent advancements in AI technology. In a statement, Intel CEO Pat Gelsinger said, "AI is supercharging the digital revolution and everything digital needs semiconductors."
The funding will be paired with Intel's previously announced plans to invest more than $100 billion in the U.S. over five years. It will be one of the largest public-private investments ever made in the U.S. semiconductor industry. Gelsinger says some 30% of the $100 billion will go towards construction costs, and the remaining will be used for chipmaking tools.
U.S. Secretary of Commerce Gina Raimondo states that the combined investment will create more than 30,000 well-paying jobs and "ignite the next generation of innovation." More than 10,000 will be permanent positions at Intel, and about 20,000 will be construction jobs. The investment will also indirectly support more than 50,000 jobs with suppliers and supporting industries.
Under the agreement, Intel could draw upon federal loans for an additional $11 billion. Intel also plans to claim the U.S. Treasury Department's Investment Tax Credit (ITC), which is expected to be up to 25% of qualified investments of more than $100 billion over five years. The funding is all subject to due diligence and further negotiation and will be based on achieving certain milestones.
Intel's planned investments have interesting names as the company hopes to Siliconize the nation. For example, the manufacturing hub in Arizona is being called the "Silicon Desert," New Mexico will be the advanced packaging "Silicon Mesa," Ohio will be the manufacturing "Silicon Heartland," and Oregon will be the R&D "Silicon Forest."
The project in Ohio will be the crown jewel. Gelsinger says it will be "the largest AI chip manufacturing site in the world" by 2027. According to Reuters, Intel competitor Taiwan Semiconductor Manufacturing is also planning a massive factory in Arizona, hoping to secure CHIPS funding.
According to the company, Intel currently employs some 55,000 people in the U.S. and indirectly supports more than 720,000 American jobs. It also contributes more than $102 billion annually to the U.S. GDP.