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Intel has been awarded a $7.86 billion subsidy from the U.S. government to support its semiconductor manufacturing projects, marking a significant step toward boosting domestic chip production. This subsidy, finalized by the U.S. Commerce Department on Tuesday, is part of a broader initiative to revitalize U.S. manufacturing and reinforce national security.
The subsidy, reduced from the initial $8.5 billion announced earlier this year, will be directed toward Intel’s nearly $90 billion manufacturing projects in key states including Arizona, New Mexico, Ohio, and Oregon. The award comes under the U.S. government’s 2022 CHIPS Act, designed to enhance semiconductor production within the country, with $39 billion allocated specifically for chip manufacturing and $11 billion earmarked for research.
Commerce Secretary Gina Raimondo hailed the award, saying, “That means American-designed chips being manufactured and packaged by American workers in the United States by an American company for the first time in a very long time.” This initiative is seen as crucial for restoring the U.S. as a leader in chip manufacturing and technology.
Intel has already made progress toward the initial milestones of its projects, with the company expected to receive at least $1 billion of the subsidy by the end of December. While the grant was slightly reduced after Intel secured a separate $3 billion contract with the Pentagon in September, U.S. officials confirmed the grant adjustment was unrelated to Intel’s current financial challenges. Despite Intel’s struggles this year, which included layoffs and narrowing profit margins under CEO Pat Gelsinger’s leadership, the government official emphasized that the company remained on track with its manufacturing goals.
The $7.86 billion grant is the largest awarded under the CHIPS Act so far, with additional funding to be distributed in the coming weeks to other companies involved in semiconductor manufacturing projects. Raimondo assured the public that all awards were being handled with careful consideration to protect taxpayer dollars.
Intel also announced its decision to forgo an $11 billion low-cost government loan offered in March. The company cited unfavorable loan terms for its shareholders as the reason for declining the loan, but expressed interest in discussing future loan provisions with the incoming administration.
In addition to the government subsidy, Intel plans to claim the Treasury Investment Tax Credit, which could cover up to 25% of qualified investments exceeding $100 billion.
Intel’s commitment to increasing domestic chip production is seen as a crucial move for both the company’s long-term growth and the United States’ efforts to secure its technological and economic future. As the world increasingly relies on semiconductors for everything from electronics to national defense, U.S. officials are optimistic that Intel’s investments will play a key role in restoring American technological leadership.
Sources By Agencies
