The Biden administration has struck a deal with Intel, offering the tech giant a substantial financial package. With up to $8.5 billion in direct funding and $11 billion in loans, the government aims to support the establishment of computer chip plants across four states. This injection of funds is expected to enable the United States to increase its global market share of advanced chip production from its current zero percent to an impressive 20 percent.
President Joe Biden is set to highlight the investment during his visit to Intel’s Ocotillo campus in Chandler, Arizona. This swing state could play a crucial role in the upcoming election. Biden, a Democrat, has expressed his belief that many voters are unaware of his economic policies. He believes that if more people were aware of his plans, they would be more inclined to support him.
Commerce Secretary Gina Raimondo announced that the United States has made a significant deal to address the country’s reliance on foreign production of advanced chips. Through this agreement, the United States aims to produce 20% of the world’s most advanced chips by 2030. To achieve this goal, Intel has committed to investing in facilities located in Arizona, Ohio, Oregon, and New Mexico. While the United States has been at the forefront of chip design, the lack of domestic manufacturing capabilities has been identified as a significant national security and economic concern.
“We cannot afford to fail – cutting-edge chips form the foundation of our innovation system, particularly in the realm of artificial intelligence and our military systems,” emphasized Raimondo during a press briefing. “Our focus must go beyond chip design; we must prioritize domestic chip manufacturing in the United States.”
Amidst the fervor of the 2024 presidential campaign, the news of the funding announcement emerges. Biden has been actively communicating with voters, emphasizing how his policies have effectively revitalized the American manufacturing sector and spurred job growth. This stance directly challenges former President Donald Trump, the presumptive Republican nominee, who, during his tenure, implemented tariffs as a means of safeguarding domestic factory jobs from China and now intends to reinstate such measures.
In the 2020 election, President Biden secured a narrow victory over former President Trump in Arizona, winning by a slim margin of 49.4% to 49.1%.
According to a February poll conducted by The Associated Press-NORC Center for Public Affairs, only 34% of U.S. adults approve of Biden’s economic leadership. This reflects a decline in public sentiment, as back in July 2021, the President enjoyed a 52% approval rating on the economy. The negative perception of Biden’s economic management can be attributed to the persistent effects of the high inflation, which reached a four-decade high in 2022.
Intel will receive funding for its projects from the bipartisan 2022 CHIPS and Science Act, which the Biden administration played a crucial role in getting through Congress. This act was necessary due to concerns following the pandemic that the U.S. economy could face a recession if it lost access to chips manufactured in Asia.
Lawmakers expressed their concern about China’s efforts to control Taiwan, given that Taiwan is responsible for over 90% of advanced computer chip production.
Ohio Sen. Sherrod Brown, a Democrat who is facing reelection this year, emphasized that his state would emerge as a major player in semiconductor manufacturing with Intel’s establishment, which would result in the creation of numerous job opportunities. Ohio, which has supported Trump in the last two presidential elections, will witness a contest between Brown and Republican Bernie Moreno, a Cleveland-based businessman endorsed by Trump, in the upcoming November elections.
On Wednesday, the government made its fourth and most significant announcement under the chips law. The support provided is expected to facilitate Intel Corp. in making a whopping $100 billion in capital investments over a span of five years. According to Intel CEO Pat Gelsinger, approximately 25% of this amount will be allocated towards building and land, while around 70% will be dedicated to acquiring equipment.
“We consider this to be a pivotal moment for the United States, the semiconductor industry, and for Intel,” expressed Gelsinger, emphasizing the significance of the CHIPS Act as “the most crucial industrial policy legislation since World War II.”
During a call with reporters, the Intel CEO expressed his desire for a sequel to the 2022 law, emphasizing the importance of providing additional funding for the industry.
According to officials from the Biden administration, government support is crucial for computer chip companies to make significant investments domestically. The investment made by Intel is expected to generate a total of 30,000 jobs in manufacturing and construction. Additionally, the company intends to take advantage of tax credits from the Treasury Department, which could be worth up to 25% of their qualified investments.
The funding from the Santa Clara, California-based company will be utilized across four different states. In Chandler, Arizona, the funds will contribute to the construction of two new chip plants, as well as the modernization of an existing one. Additionally, two advanced plants will be established in New Albany, Ohio, which is conveniently located just outside the state capital of Columbus.
In addition to that, Intel has plans to transform two of its plants located in Rio Rancho, New Mexico into state-of-the-art packaging facilities. Moreover, the company is set to modernize its facilities in Hillsboro, Oregon.
The Biden administration has prioritized workforce training and affordable child care in its agreements to support companies. As part of its agreement with the Commerce Department, Intel will not only commit to local training programs but also increase the reimbursement amount for its child care program. These efforts reflect the administration’s focus on empowering workers and ensuring access to quality child care.
