Biden awards Chips Act funds to Intel in Phoenix - The Washington Post

The Biden administration is awarding up to $8.5 billion in grants and $11 billion in loans to tech giant Intel to support computer-chip production in several states, in one of the nation’s biggest investments in high-tech manufacturing seen as crucial to national and economic security.

President Biden on Wednesday joined Intel’s chief executive at a massive construction site in suburban Phoenix to announce the awards, which the California-based company will use to support that project and others in Ohio, New Mexico and Oregon.

Intel said it is investing more than $100 billion in the projects, which it estimated will create 10,000 manufacturing jobs and 20,000 construction jobs.

The funding is a key plank of Biden’s program to channel federal funds into domestic industry and infrastructure to boost U.S. competitiveness and create jobs. Biden hammered home that message at the construction site in Maricopa County, an important swing county that flipped to Biden from Donald Trump in the 2020 presidential election.

The Intel projects mean “people don’t have to leave their hometowns to get good-paying jobs and support their families,” Biden told a crowd assembled around a cluster of cranes and other construction equipment.

“The same thing is happening in other states as well. It’s all part of our Investing in America agenda, which has attracted $675 billion in private-sector investments and ignited a manufacturing boom in America, a clean energy boom, a jobs boom — all here in America, finally,” Biden said.

The eye-popping awards to Intel are the biggest yet under the Biden-backed Chips and Science Act of 2022, which dedicated $52 billion for grants and $75 billion for loans to support domestic chip production and research. The tiny components are the brains that power all modern technology, from smartphones and fighter jets to artificial-intelligence programs.

The legislation won bipartisan backing — though far more support from Democrats than from Republicans, Biden reminded the audience Wednesday — as lawmakers and officials grew alarmed that the United States was relying too heavily on Asia for its chips, also known as semiconductors. The United States still designs many of the world’s most advanced chips but most of the components are manufactured in Taiwan, South Korea and China. Not having stronger domestic manufacturers poses risks as so many industries of the future, including AI and electric vehicles, depend on the components.

“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,” Commerce Secretary Gina Raimondo said Tuesday on a call with journalists to preview the news.

Critical shortages of computer chips during the pandemic hobbled U.S. auto manufacturing and drove up car prices, underscoring the need to bolster domestic suppliers.

“By coming together today, we are declaring that America will not surrender leadership to our competitors. We are choosing innovation over inaction,” Intel chief executive Pat Gelsinger said in a speech Wednesday.

The promise of federal funding has prompted several large chip construction projects nationwide, including a second massive site on the other side of Phoenix, where 12,000 construction workers are building a $40 billion manufacturing complex for Taiwan’s TSMC. That project is also expected to win a large award from the Chips and Science Act, as are construction sites in Texas, Idaho and New York.

A second project in New York, partly aimed at making automotive chips, won a $1.5 billion grant last month.

The United States pioneered semiconductor technology decades ago but since the 1990s has allowed its chip manufacturing to atrophy, even as China’s production soared, thanks to heavy subsidies. U.S.-based plants made 37 percent of the world’s chips in 1990 but only about 12 percent in recent years.

Most of the big Chips Act awards are still to come. Since December, the administration has announced several smaller grants, including $35 million to BAE Systems, a defense contractor that makes a chip used in fighter jets, and $162 million to Microchip Technology, which builds memory chips and other widely used “microcontrollers” at fabrication facilities in Colorado and Oregon.

Intel also plans to claim federal tax credits on up to 25 percent of its $100 billion in capital expenditures on the projects, the company said.

Critics of the federal funding have argued that taxpayers should not be funneling such large sums into highly profitable industries like the chip business. Biden officials argue that the domestic manufacturing projects would not have started without the federal support.

The promise of Chips Act funding has helped accelerate a tech boom in Maricopa County, where dozens of future suppliers to the chip factories are also setting up shop. “This is huge news that will cement Arizona as a global hub for microchips and create a lot of great-paying jobs that don’t require a four-year degree,” Sen. Mark Kelly (D-Ariz.), a sponsor and key negotiator of the Chips and Science Act, said of the awards.

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