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Intel to receive $8.5 billion in subsidies to build chip plants| GuyWhoKnowsThings

President Biden plans to announce Wednesday that his administration will provide up to $8.5 billion in grants to Intel, a major investment to boost the country's semiconductor production, during a tour of battleground states aimed at selling his economic agenda.

Biden will make the announcement during a visit to the Intel campus in the Phoenix suburb of Chandler, Arizona, White House officials said. The award, which will go toward the construction and expansion of Intel facilities in the United States, is the largest ever awarded by the federal government with funding from the CHIPS Actwhich lawmakers approved in 2022 to help reestablish the United States as a leader in semiconductor manufacturing.

The Biden administration, armed with $39 billion in subsidies to distribute, is spearheading an ambitious effort to ramp up production of the tiny chips that power everything from smartphones to computers to cars. The effort is at the heart of Biden's goal of reducing America's dependence on foreign countries: Although semiconductors were invented in the United States, only about 10 percent of the world's chips are made domestically.

In addition to the grants, the federal government plans to provide Intel with up to $11 billion in loans on what the company characterized as generous terms. Intel is also expected to claim federal tax credits that could cover 25 percent of the expenses of its U.S. expansion projects, which are expected to cost more than $100 billion over five years.

The grants are intended to help finance the company's construction plans in Arizona, Ohio, New Mexico and Oregon. The projects are expected to create more than 10,000 manufacturing jobs and approximately 20,000 construction jobs, according to Biden administration officials.

In Arizona, the money will help finance Intel's recent construction of two advanced plants and the modernization of another facility. The money will also help establish an entirely new site near Columbus, Ohio, starting with two factories, in its first move to a new region of the United States in more than 40 years.

In Rio Rancho, New Mexico, Intel will use federal funds to transform two plants into advanced packaging facilities, where chips are assembled to improve performance and reduce costs. The company will also expand and modernize an innovation center in Hillsboro, Oregon, which is expected to boost the company's technological leadership and the development of new innovations.

Commerce Secretary Gina Raimondo, whose department oversees distribution of the grants, said the award would help boost the country's production of the most advanced semiconductors, which are used in artificial intelligence, smartphones, supercomputers and the most sensitive military hardware. . . The United States currently produces none.

“We rely on a very small number of factories in Asia for all of our most sophisticated chips,” Raimondo said during a call with reporters. “That is unsustainable and unacceptable. “It is an economic security problem, it is a national security problem and we are going to change that.”

Raimondo said Intel's award would be the largest grant to a chipmaker under the new program. The investment will also help put the United States on a path toward produce approximately 20 percent of the world's cutting-edge chips by the end of the decade, he said.

Biden and his Democratic allies see investments in semiconductors as a key way to try to change perceptions about the economy among voters in battleground states like Arizona.

“We have not been talking to people about the issues that President Biden has been addressing, and that is what we are determined to do,” Yolanda Bejarano, chairwoman of the Arizona Democratic Party, said Tuesday, adding that Democrats would need to talk further. on the effects of investments in semiconductors.

Although Intel will have to meet certain milestones before the money is distributed, senior Biden administration officials said they expected funds to begin flowing to the company later this year.

Patrick Gelsinger, Intel's chief executive, told reporters at a briefing Tuesday afternoon that the government incentives represented a proud moment for his company and a major achievement for politicians of both parties. While pleased with the incentives going to Intel, he said officials may need to invest more in the industry to reverse decades of shifting investment from the United States to Asian countries.

“This is not solved in a three- to five-year program,” Gelsinger said. “I think we'll need at least one CHIPS 2 to finish that job.”

Intel is the fourth company to receive a federal grant under the new program, bringing the total announced grants to more than $10 billion. The first three grants (to GlobalFoundries, Microchip Technology and BAE Systems) were for makers of legacy chips, which are created using older production processes but are still used in many products such as cars and dishwashers.

Biden administration officials are expected to announce more awards in the coming months to other major chipmakers, including Taiwan Semiconductor Manufacturing Company, Samsung and Micron Technology. These companies have also done Large investments in new or expanded semiconductor manufacturing. plants in the United States in recent years.

The United States' dependence on Asia for its chips has become even more pronounced with the rise of artificial intelligence; Almost all of the chips used to power the latest generative AI services were manufactured in Taiwan by TSMC, although designed by Silicon Valley company Nvidia.

Intel has been trying to change that by developing new manufacturing technology, starting to build chips designed by other companies and lobbying hard for legislation. The investment in Intel aims to help US companies lead the artificial intelligence industry by ensuring there is a domestic supply of advanced chips.

About $50 million in federal funds will be set aside for Intel to spend on training and developing its workforce. Many semiconductor companies and industrial groups have expressed concern about a possible shortage of technicians, engineers and other workers to cover all the positions that will be created once the facilities are built.

In total, private companies have announced more than $240 billion in investments in semiconductor and electronics manufacturing since Biden took office, according to administration officials. Some chip manufacturers, however, have run into obstacles at the same time they were trying to expand their domestic manufacturing capacity, causing delays.

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