White House proposes up to $8.5 billion in funding for Intel’s domestic chip manufacturing

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Intel has been a cornerstone of U.S. efforts to expand domestic chip manufacturing long before President Joe Biden signed the CHIPS and Science Act into law in August 2022. This morning, the White House announced an agreement with the Commerce Department that will provide silicon giants with up to $8.5 billion to ramp up production at U.S. sites.

The CHIPS Act can be seen as a direct result of a number of pressing geopolitical issues. The first is supply chain bottlenecks that have persisted since Asia was hit hard early in the pandemic. The second is the US-China conflict that reached its climax under the previous administration and continues to smolder today.

Asia, particularly Taiwan, continues to produce the majority of the world’s semiconductors. Between semiconductor giant TSMC in the densely populated East Asian country and heavy manufacturing operations in Chinese cities like Shenzhen, key industries from smartphones to cars were brought to a virtual standstill in the initial lockdown. I fell into it.

The above, combined with longstanding efforts to revitalize U.S. industry, spurred economic efforts to revive manufacturing. Intel, which had given up much of the smartphone industry to competition, was eager to get involved. While the CHIPS Act was still being debated on Capitol Hill, Intel announced plans to open his $10 billion manufacturing facility outside Columbus, Ohio. It was also a big-ticket show of confidence not only in U.S. manufacturing capabilities but also in the growing tech scene outside its usual bases of San Francisco and New York.

In addition to Ohio, Intel is eyeing Arizona, New Mexico and Oregon, adding that it plans to invest 10 times that amount over the next five years. The company said it expects these efforts to create 20,000 jobs in construction and 10,000 jobs in manufacturing, an administration closely following the monthly jobs report. This is a jarring story for me.

There is also an added incentive for U.S.-based companies to manufacture products in the U.S., reducing bottlenecks by moving manufacturing closer to the point of consumption. These are all issues that incumbent lawmakers could hang their hats on in an election year.

“With this agreement, we will incentivize more than $100 billion in investment from Intel, one of the largest investments ever in U.S. semiconductor manufacturing, and will lead to more than 30,000 jobs. It will create good-paying jobs and ignite the next generation of innovation,” the Secretary of State said. Commerce Secretary Gina Raimondo said in a release.

The question of whether the U.S. government is doing enough to level the playing field between domestic semiconductor companies and their competitors is an entirely different question. Many industry experts I’ve talked to over the past few years say that while these efforts are a good start, there is still a gap between U.S. manufacturing and the head start enjoyed by companies like TSMC. suggests that there is not nearly enough to fill the gap. You also need to consider how long it will take for many of these plants to be up and running.

In particular, Intel recently pushed back the production start date of its New Albany, Ohio, factory by two years to 2027, citing changes in the business environment. As of the report, the company had spent $1.5 billion and had “69 employees from 14 Ohio counties working on the project site, with construction workers from 75 of Ohio’s 88 counties working on the project to date.” “I’m making a contribution.” The numbers are not yet large enough to have a major impact on employment statistics.

Additional locations are planned in Chandler, Arizona. Rio Rancho, New Mexico. and Hillsboro, Oregon.