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WEKU
WEKU
Politics
Deepa Shivaram

Biden is giving Intel $8.5 billion for big semiconductor projects in 4 states

Intel CEO Pat Gelsinger shows President Biden a semiconductor wafer during a tour at the company's Ocotillo Campus in Chandler, Ariz. on March 20. (Brendan Smialowski/AFP via Getty Images)

CHANDLER, Ariz. — President Biden announced a deal with Intel that will give the chipmaker up to $8.5 billion in grants and another $11 billion in loans to build semiconductor plants in four states — the biggest project to date in his push to bring chips manufacturing back to America.

The funding comes from the CHIPS and Science Act passed by Congress in 2022 to pour more than $52 billion into projects to dramatically boost U.S. production of the tiny electronic devices found in everything from cars to cell phones to military weapons.

The deal with Intel — which is preliminary and still involves due diligence to finalize — will see the company invest more than $100 billion of its own money into the projects. Intel expects to offset that investment by claiming as much as $25 billion in investment tax credits, the company's CEO Pat Gelsinger told reporters.

These are the kinds of jobs Biden has been campaigning on

All told, Biden said the Intel projects will create nearly 30,000 construction and factory jobs. They are an example of the kinds of jobs he is campaigning on as he makes his pitch for a second term — jobs made possible by his brand of government intervention in the private sector, an industrial policy that had, for decades, fallen out of fashion.

President Biden boards Air Force One at Harry Reid International Airport as he departs Las Vegas for Phoenix on March 19. (Brendan Smialowski/AFP via Getty Images)

Biden announced the funding during a swing through two battleground states that are key to his reelection campaign — Arizona and Nevada — where he is trying to change the perception that the economy was better under the policies of former President Donald Trump, his opponent in November.

Trump had also promoted policies he said would support American manufacturing, like tariffs to keep out imports and tax cuts for corporations.

But Biden said his investments in manufacturing had help the economy rebound. "It's a fundamental break from the trickle-down economics supercharged by my predecessor," Biden said during his remarks at Intel's Ocotillo campus outside of Phoenix.

"On his watch, companies sent American jobs overseas for cheaper labor, and imported products," Biden said.

These plants will make a kind of chip not currently made in the United States

The investment by Intel will give the United States a foothold in leading-edge logic chips — the kind of semiconductors used for artificial intelligence and military systems. Right now, these chips are all made overseas.

"I was stunned at how thin the fibers are," Biden said after examining a chip during a tour — fibers he described as being the width of a strand of human DNA.

"Amazing to me. I'll be darned. Well, you're bringing the future back to America, man," he said.

President Biden walks with Intel CEO Pat Gelsinger at an Intel site near New Albany, Ohio, on Sept. 9, 2022. (Saul Loeb/AFP via Getty Images)

Commerce Secretary Gina Raimondo told reporters she wants to see 20% of these advanced chips made in the United States by 2030, and said the Intel projects would make that achievable.

"We rely on a very small number of factories in Asia for all of our most sophisticated chips. That's untenable and unacceptable. It's an economic security problem. It's a national security problem. And we're going to change that," she told reporters.

The company will build two new plants in each of Chandler, Ariz., and New Albany, Ohio, and will modernize a fifth existing plant in Arizona.

Brad Gist, 30, works with Liam Levinson, 28, during a lab for a 10-day semiconductor course at Chandler Gilbert Community College in Mesa, Ariz., on Oct. 11, 2023. (Caitlin O'Hara for NPR)

It's a big government program, but it may not be enough, Intel's CEO says

In New Mexico, Intel will overhaul two plants to make them into specialized advanced packaging facilities — another capability that is not currently available domestically, Raimondo told reporters. Intel will also expand and modernize its research and development facility in Oregon.

The deal involves $50 million funding for training workers, agreements on using union labor and arrangements for providing childcare to employees, the White House said.

Despite the massive investment in the sector from the CHIPS legislation, it may not be enough, said Gelsinger, CEO of Intel, who told reporters a "CHIPS II" infusion of government aid may be needed down the road.

"I don't think CHIPS I is the end of what we need to do to rebuild the industry," he said. "It took three decades for this industry to sediment away from the United States and the Western world. It doesn't get fixed in one three- to five-year program. I do think more is required," he said.

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