The Biden administration is planning to reduce part of Intel's $8.5 billion federal funding for computer chip plants across the country. This decision comes as Intel is also set to receive $3 billion to supply computer chips to the military. President Joe Biden announced the agreement in March, providing Intel with up to $8.5 billion in direct funding and $11 billion in loans.
The changes to Intel's funding are not linked to the company's financial performance or milestones. In an effort to stay competitive with rivals like Nvidia and AMD, Intel recently announced a workforce reduction of 15%, affecting approximately 15,000 jobs.
Unlike some competitors, Intel both designs and manufactures chips. Two years ago, President Biden praised Intel for its job creation efforts, particularly its plans to establish a new plant near Columbus, Ohio. The project was expected to create 7,000 construction jobs and 3,000 full-time positions with an average annual salary of $135,000.
Intel's funding is tied to the CHIPS and Science Act, a $280 billion package signed into law in 2022. This legislation aims to bolster U.S. semiconductor manufacturing, enhance military technology, and address supply chain disruptions experienced during the pandemic-induced chip shortage in 2021.
In a move to reduce reliance on Asian suppliers, the Biden administration has pledged significant financial support for the construction of U.S. chip foundries. This includes providing up to $6.6 billion to a Taiwanese semiconductor company to expand its facilities in Arizona, ensuring the domestic production of advanced microchips for the first time.
The administration's focus on strengthening domestic chip manufacturing is driven by concerns over national security vulnerabilities associated with foreign chip production, particularly in light of geopolitical tensions in regions like Taiwan, a key hub for advanced chip manufacturing.
