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The Biden Administration has finalized a $7.86 billion funding agreement with Intel under the CHIPS and Science Act to bolster domestic semiconductor manufacturing.
Something you should know before you read: Two years ago, the CHIPS and Science Act was enacted as a $52 billion initiative to boost domestic semiconductor manufacturing and research, aiming to reduce the United States’ dependence on foreign chip production. The legislation was designed to address critical supply chain vulnerabilities exposed during the global chip shortage, which disrupted industries from automotive to consumer electronics. A key motivator behind the Act was growing concern over US reliance on Taiwan, which produces over 60% of the world’s semiconductors, including the majority of advanced chips essential for defense and technology. Taiwan’s semiconductor dominance and proximity to China, which has expressed intentions to reunify the island with the mainland (by force if necessary), have raised alarms about the potential for severe economic and security disruptions should a war break out.
What’s going on now: Today, the Biden administration finalized the allocation of $7.86 billion in CHIPS Act funding for Intel, a reduction of $640 million from the $8.5 billion initially announced earlier this year. The funds will be used to construct new semiconductor manufacturing facilities in Arizona and Ohio and to modernize existing plants in Arizona, New Mexico, and Oregon. Despite the funding reduction, Intel plans to invest $90 billion in US operations by 2030, aligning with national goals to strengthen the semiconductor industry.
US officials react: In a statement, White House Deputy Chief of Staff Natalie Quillian said, “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. Intel’s investments across the country demonstrate once again how President Biden’s Investing in America agenda is delivering for the American people.”
Commerce Secretary Gina Raimondo added, “The CHIPS for America program will supercharge American innovation and technology and make our country more secure — and Intel is playing an important role in the revitalization of the U.S. semiconductor industry through its unprecedented investments across Arizona, New Mexico, Ohio, and Oregon.”
