Biden announces a multi-billion dollar grant for Intel to expand chip production
President Biden will give Intel a multibillion-dollar award on Wednesday to expand its chip production in the United States, people familiar with the decision said, as the president defends his economic policies during a tour of the Southwest.
The announcement in Phoenix, Arizona, is a major distinction from Mr. Biden’s $39 billion CHIPS and Science Act, which aims to build the U.S. semiconductor industry and reduce dependence on technology from East Asia.
Mr. Biden has made expanding production of chips, used in a variety of technologies, a central focus of both efforts to compete with China and boost domestic manufacturing.
White House officials have provided few details about the award for Intel, but an official who spoke on condition of anonymity to discuss the grant said it would be the first for several chip makers, including Samsung, Micron and the Taiwan Semiconductor Manufacturing Company.
The White House hopes to accelerate the implementation of its semiconductor investments, but some companies have encountered obstacles. TSMC postponed initial production at its first plant in Arizona from this year until 2025 because local workers lacked expertise in installing advanced equipment.
Biden administration officials have also emphasized the need to ramp up apprenticeship programs to prepare a workforce that can fill factories in places like Arizona or Texas.
The money is hugely important to Intel and Patrick Gelsinger, who returned as CEO of the company three years ago and took on the dual mission of restoring Intel’s technological lead in manufacturing and America’s position in global chip manufacturing.
The company’s microprocessor chips, which provide computing power to most of the world’s computers, are regularly improved by advances at Intel factories in shrinking transistors to pack more of those tiny switches onto every piece of silicon. But Intel has stumbled over the past decade in delivering new generations of manufacturing technology, allowing TSMC and Samsung to build more advanced chips.
Mr. Gelsinger responded with an ambitious plan to introduce five new manufacturing processes in four years, along with a radical change in Intel’s business model. The company, which for decades has dedicated its factories to producing the chips it designs and sells, now competes with TSMC and Samsung in the so-called foundry sector of manufacturing chips designed by others.
He also initiated a costly expansion campaign with new or upgraded factories in Arizona, Ohio, New Mexico, Ireland, Israel and Germany. Mr. Gelsinger, perhaps the industry’s most outspoken supporter of the CHIPS law, did not wait for money from the Commerce Department before starting those construction projects.
But he seemed impatient with the speed at which the department was doling out grants, an effort that required complicated negotiations between companies and new specialists the government has hired.
“We have not announced our CHIPS grant yet,” Mr. Gelsinger said, speaking at a company event in February alongside Gina Raimondo, the Commerce Secretary, who attended by video link. “Yes, very soon, right?” he asked.
The company, whose business has been hit by a post-pandemic slowdown in sales of computers using its chips, has used debt financing and other tactics to help finance its expansion. But Mr. Gelsinger has made clear that he has faced pressure from Intel board members to justify spending on the new factories, which fabricate chips on silicon wafers and could cost $10 billion to $20 billion each.