The Biden administration has announced a groundbreaking agreement with Intel, offering the company a substantial financial boost to the tune of $8.5 billion in direct funding and $11 billion in loans. This infusion of cash aims to support the establishment of new computer chip plants across four states. By facilitating the expansion of advanced chip production, the government hopes to propel the U.S. from a current global market share of zero percent to an impressive 20 percent.
President Joe Biden intends to highlight the investment during his visit to Intel’s Ocotillo campus in Chandler, Arizona, a potentially pivotal swing state in the upcoming election. The Democratic president has frequently expressed his belief that many voters are not aware of his economic policies and has implied that increased awareness would garner more support for him.
According to Commerce Secretary Gina Raimondo, the recently established agreement facilitated by her department will enable the United States to manufacture 20% of the world’s most advanced chips by 2030. This significant achievement will be made possible through Intel’s investments in facilities located in Arizona, Ohio, Oregon, and New Mexico. While the United States excels in chip design, the country’s reliance on foreign production has become a concerning issue in terms of national security and economic stability.
“Failure is not an option,” emphasized Raimondo during a call with reporters. She stressed the vital role that cutting-edge chips play in driving innovation, particularly in the fields of artificial intelligence and military systems. Raimondo further emphasized the importance of not just designing chips but also manufacturing them domestically in America.
Amid the heat of the 2024 presidential campaign, the funding announcement is made. Biden has been assuring voters that his policies have sparked a revival in U.S. manufacturing and job growth. This stance directly challenges former President Donald Trump, the anticipated Republican nominee, who implemented tariffs during his time in office and aims to do so again in order to safeguard American factory jobs from China.
In the 2020 election, Joe Biden emerged as the winner in Arizona, edging out Donald Trump by a narrow margin of 49.4% to 49.1%.
According to a February poll by The Associated Press-NORC Center for Public Affairs, only 34% of U.S. adults approve of Biden’s economic leadership. This is a significant decline from July 2021 when he had a 52% approval rating on the economy. The negative sentiment can be attributed to the lingering impact of inflation, which reached a four-decade high in 2022.
Intel will receive funding for its projects from the bipartisan 2022 CHIPS and Science Act, which was supported by the Biden administration and passed by Congress. The Act was introduced to address concerns about the potential economic repercussions of losing access to chips manufactured in Asia due to the pandemic.
Lawmakers voiced their concerns about China’s attempts to control Taiwan, which is responsible for over 90% of advanced computer chip production, when advocating for the investment.
Ohio Senator Sherrod Brown, a Democrat seeking reelection this year, emphasized that his state is poised to become a frontrunner in semiconductor manufacturing, thanks to the thousands of jobs that Intel will create. It’s worth noting that Ohio voted for Trump in the last two presidential elections. In the upcoming November election, Brown will be up against Republican Bernie Moreno, a businessman from Cleveland who has received support from Trump.
Wednesday’s announcement marks the fourth and most significant development under the chips law, as the government’s support is set to facilitate Intel Corp. in making a whopping $100 billion in capital investments over the span of five years. According to Pat Gelsinger, the CEO of Intel, approximately 25% of the overall investment will be allocated for building and land, while around 70% will be dedicated to acquiring equipment.
“We consider this to be a pivotal moment for the United States, the semiconductor industry, and Intel,” stated Gelsinger. He further added that the CHIPS Act is of utmost importance, deeming it as “the most crucial industrial policy legislation since World War II.”
During a call with reporters, the Intel CEO expressed his desire for a follow-up to the 2022 law, emphasizing the need for additional funding for the industry.
According to officials from the Biden administration, the government’s support is crucial for computer chip companies to make significant investments within the country. With the funding from Intel, a whopping 30,000 jobs in manufacturing and construction are expected to be created. Additionally, the company is also aiming to benefit from tax credits worth up to 25% on qualified investments, provided by the Treasury Department.
The Santa Clara, California-based company has secured funding that will be utilized in several states. In Chandler, Arizona, the funds will be allocated towards the construction of two new chip plants and the modernization of an existing facility. Additionally, the funding will be utilized to establish two state-of-the-art plants in New Albany, Ohio, located just outside the state capital of Columbus.
Intel is taking steps to enhance its operations by converting two of its plants in Rio Rancho, New Mexico, into advanced packaging facilities. Additionally, the company is planning to modernize its facilities in Hillsboro, Oregon.
The Biden administration has prioritized workforce training and affordable child care in its agreements to assist companies. As part of the agreement with the Commerce Department, Intel will not only commit to local training programs but also enhance its child care program’s reimbursement amount, among other initiatives.
