CHANDLER (ARIZONA): President Joe Biden awarded Intel nearly US$20 billion (RM94.78 billion) in grants and loans on Wednesday (March 20), marking the US government’s largest outlay to subsidise leading-edge chip production and supercharging the company’s domestic semiconductor chip output.
Biden announced the preliminary agreement for US$8.5 billion in grants and up to US$11 billion in loans for Intel in Arizona, where some of the funding will be used to build two new factories and modernise an existing one. He said the pandemic helped cause an acute shortage of semiconductors, forcing factories to shut and prices to rise, and he has since been determined to invest in America. “We will enable advanced semiconductor manufacturing to make a comeback here in America after 40 years,” the president said.
“If we invented it in America, it should be made in America,” Biden said. This investment “will transform the country in a way, you don’t even understand”.
Commerce Department Secretary Gina Raimondo on Tuesday called it one of the largest investments ever in US semiconductor manufacturing. She said the administration hopes to increase the US share of advanced chip production from 0% to 20% by 2030 through the subsidy program.
The historic outlay shows the Biden administration is betting big on Intel as part of the 2022 CHIPS and Science Act, a bid to boost domestic semiconductor output with US$52.7 billion in funding.
The CHIPS Act’s goal is to reduce reliance on China and Taiwan, as the share of global semiconductor manufacturing capacity in the US has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association.
Lawmakers have warned US dependence on chips manufactured in Taiwan by the world’s top contract chip manufacturer TSMC is risky because China claims the island as its territory and has reserved the right to use force to retake it.
Republican US Representative Michael McCaul, a sponsor of legislation that helped shape the CHIPS Act, welcomed Wednesdays announcement.
It is also welcome news for Intel, which in January forecast first-quarter revenue could miss market estimates by more than US$2 billion, as it grapples with uncertain demand for its chips used in the traditional server and personal computer markets.
Intel shares ended the day up just 0.36% at US$42.20.
In addition to Intel’s Arizona projects, the money will help fund company projects in Ohio, New Mexico and Oregon.
The chip maker is also expected to receive as much as US$3.5 billion from the Commerce Department to boost security at its Arizona facilities to produce sensitive chips for the military.
The Intel award is the latest in a string of subsidy announcements.
Awards for South Korea’s Samsung and Taiwan’s TSMC are expected in the coming weeks.
The Commerce Department is dedicating US$28 billion for government subsidies for advanced chips manufacturing – although it has more than US$70 billion in requests – and also has US$75 billion in lending authority. – Reuters
