Jean MartinThe Biden administration is reportedly discussing providing Intel Corp. with over $10 billion in subsidies, marking the largest potential award under the Chips and Science Act aimed at revitalizing semiconductor manufacturing within the United States.
Details of the Subsidy Package:
According to sources familiar with the matter, the proposed subsidy package for Intel is anticipated to comprise a combination of loans and direct grants. Negotiations are ongoing, with neither the Commerce Department nor Intel providing official comments.
Objective of the Chips and Science Act:
Enacted in 2022, the Chips and Science Act allocated $39 billion in direct grants and $75 billion in loans and loan guarantees to incentivize leading semiconductor companies to establish manufacturing facilities within the US.
The potential subsidy for Intel underscores the government’s commitment to reshoring chip production after years of offshore manufacturing.
Implications for Intel and the Semiconductor Industry:
News of the potential subsidy saw Intel’s stock price rise by as much as 1.1% in late trading on Friday, reflecting investor optimism regarding the company’s prospects. Intel’s recent investments in Ohio, Arizona, and New Mexico underscore its commitment to expanding domestic manufacturing capabilities.
Intel’s Competitive Position and CEO Advocacy:
While Intel has historically dominated the chip industry, it faces increasing competition from Asian rivals such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. Intel’s CEO, Pat Gelsinger, has been a vocal advocate for government support of the semiconductor sector, emphasizing the importance of US-based production facilities.
The subsidy allocation between grants and loans remains uncertain, as do the specific terms and conditions associated with the funding.
Nonetheless, the potential award to Intel signals a significant step towards bolstering domestic semiconductor manufacturing and advancing the Biden administration’s goal of establishing leading-edge manufacturing clusters by 2030.
