Intel in talks with Biden administration for subsidies worth over $10 billion

The Biden administration is in talks to confer more than $10 billion in subsidies to Intel Corp., people familiar with the matter said, in what would be the largest award yet under a plan to bring semiconductor manufacturing back to US soil.

If approved, it would be the largest award yet under a plan to bring semiconductor manufacturing back to US soil. (REUTERS)
If approved, it would be the largest award yet under a plan to bring semiconductor manufacturing back to US soil. (REUTERS)

Intel’s award package is expected to include both loans and direct grants, according to the people, who asked not to be identified because the deliberations are private. They stressed that negotiations are still underway.

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The Commerce Department and Intel declined to comment.

The incentives would come from the 2022 Chips and Science Act, which set aside $39 billion in direct grants as well as loans and loan guarantees worth $75 billion to get the world’s top semiconductor companies to manufacture chips in the US after decades of production abroad.

Intel climbed as much as 1.1% in late trading Friday after Bloomberg reported the news. The stock was down 13% this year through the close.

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Chips firms have invested more than $230 billion in the US since President Joe Biden took office, and the administration’s goal is to establish at least two leading-edge manufacturing clusters by 2030.

The Commerce Department has already announced two smaller Chips Act grants. Secretary Gina Raimondo said last week that there would be a “drumbeat of even bigger announcements” in the next six to 12 weeks.

Earlier: US Aims to Announce Big Grants for Chip Plants by End of March

Intel dominated the chip industry for years but has recently fallen behind Asian rivals Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., which are building their own US sites in Arizona and Texas. Intel Chief Executive Officer Pat Gelsinger has been the leading industry voice lobbying for US government support of the sector, and the firm has said its plans are contingent on that funding.

Intel is building a $20 billion facility in Ohio, undergoing a $20 billion expansion in Arizona and investing $3.5 billion in New Mexico.

It’s not yet clear how Intel’s award would be split between grants and loans, the people said. Loan terms are company-specific, the people said, as are benchmarks that the Commerce Department will impose to disburse the funding over time.

Intel hasn’t said when its projects will begin commercial production. The company has made significant progress in Ohio, a spokesperson said after the Wall Street Journal reported a delay from 2025 to 2026. An administration official said that the timeline is in bounds with Intel’s initial projections and based on market factors, not award announcements.

The Commerce Department earlier announced Chips Act grants to the American subsidiary of BAE Systems Plc and Microchip Technology Inc. for facilities in New Hampshire, Oregon and Colorado.

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