The Biden administration has reached a deal to provide Intel with up to $8.5 billion in direct funding and $11 billion in loans to build computer chip factories in Arizona, Ohio, New Mexico and Oregon.
President Joe Biden plans to talk about the investment Wednesday when he visits Intel’s campus in Chandler, Arizona, which could be a decisive swing state in November’s election. He has often said that not enough voters understand his economic policies, saying more voters would support him if they did.
U.S. Commerce Secretary Gina Raimondo said the agreement reached through her department would allow the U.S. to produce 20% of the world’s most advanced chips by 2030, up from the current level of zero. The United States designs advanced chips but is unable to manufacture them domestically, which has become a national security and economic risk.
“Failure is not an option – leading chips are at the core of our innovative systems, especially in terms of advances in artificial intelligence and our military systems,” Raimondo said in an interview with reporters. “We can’t just design chips. We have to make them in the United States.”
The funding announcement comes as the 2024 presidential race heats up. Biden has been telling voters that his policies have led to a recovery in U.S. manufacturing and job growth. His message was a direct challenge to former President Donald Trump, the presumptive Republican nominee, who raised tariffs while in the White House and hopes to do so again amid a pledge to protect U.S. factory jobs from China .
In 2020, Biden narrowly defeated Trump in Arizona, 49.4% to 49.1%.
A February poll from The Associated Press-NORC Center for Public Affairs found that American adults were pessimistic about Biden’s economic leadership, with only 34% approving. The lingering impact of inflation hitting a four-year high in 2022 is hurting Democrats, whose approval rating for the economy was 52% in July 2021.
Intel’s project will be funded in part through the bipartisan Chip and Science Act of 2022, which the Biden administration helped pass through Congress amid concerns that losing Asian-made chips could plunge the U.S. economy into recession in the wake of the pandemic .
In pushing for the investment, lawmakers expressed concerns about China’s efforts to control Taiwan, which accounts for more than 90% of advanced computer chip production.
Ohio Sen. Sherrod Brown, a Democrat running for re-election this year, stressed that the state will become “a global leader in semiconductor manufacturing” as Intel will create thousands of jobs. Ohio has voted for Trump in the past two presidential elections, and Brown will face Republican Bernie Moreno, a Trump-backed Cleveland businessman, in November.
Wednesday’s announcement is the chip law’s fourth and largest to date, with government support expected to help Intel make $100 billion in capital investments over five years. About 25% of that will involve buildings and land, while about 70% will be for equipment, Intel CEO Pat Gelsinger said.
“We believe this is a defining moment for the United States, the semiconductor industry and Intel,” Kissinger said. He called the CHIPS Act “the most important industrial policy legislation since World War II.”
Intel’s CEO said in a call with reporters that he would like to see a sequel to the 2022 law to provide additional funding to the industry.
Biden administration officials have said computer chip companies will not invest domestically at the scale expected without government support. Intel’s funding will bring a total of 30,000 manufacturing and construction jobs. The company also plans to apply to the Treasury for tax credits of up to 25% of qualified investments.
The Santa Clara, California-based company will use the funds in four different states. In Chandler, Arizona, the funds will be used to build two new chip factories and modernize an existing one. The funding will build two state-of-the-art factories in New Albany, Ohio, just outside the state capital of Columbus.
The company will also convert two factories in Rio Rancho, New Mexico, into advanced packaging facilities. Intel will also modernize its facility in Hillsboro, Oregon.
The Biden administration has also made workforce training and access to affordable child care a priority in agreements to support companies. Under the agreement with the Commerce Department, Intel will work on local training programs and increase reimbursements for its child care program, among other things.
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