Thu, Mar 21, 2024 page12

• Intel wins almost US$20bn in incentives

  • Bloomberg
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  The US is to award Intel Corp US$8.5 billion in grants and as much as US$11 billion in loans to help fund an expansion of its semiconductor fabs, the US Department of Commerce announced yesterday, marking the largest award from a program designed to reinvigorate the nation’s chip industry.

  The package would support more than US$100 billion in US investments from Intel, including efforts to produce cutting-edge semiconductors at large-scale plants in Arizona and Ohio, the department said.

  The money would also help pay for equipment research and development, and advanced packaging projects at smaller facilities in Oregon and New Mexico.

  

  The Intel Corp logo is pictured on a sign outside its Fab 42 semiconductor plant in Chandler, Arizona, on Oct. 2, 2020.

  Photo: Reuters

  In addition, Intel has indicated that it plans to tap investment tax credits from the US Department of the Treasury that could cover as much as 25 percent of capital expenditures, the commerce department said.

  The subsidies come from the 2022 CHIPS and Science Act, which set aside US$39 billion in grants — plus loans and guarantees worth US$75 billion — to convince chip companies to build factories on US soil.

  For Intel, the facilities are part of an ambitious turnaround bid under CEO Pat Gelsinger. The effort has included building up a foundry business — an operation that makes chips for other companies — and Intel recently secured Microsoft Corp as a high-profile customer.

  Gelsinger has also been trying to restore Intel’s technological capabilities. The company had in the past few years fallen behind Asian rivals Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co in that area. The latter two are also stepping up US expansion plans and are expected to receive their own CHIPS Act awards in the coming weeks.

  Intel is the first company to land a preliminary CHIPS Act funding deal for advanced chipmaking facilities. Earlier awards went to companies producing older-generation semiconductors.

  Gelsinger said that it has been economically uncompetitive to build plants in the US compared with East Asia.

  These awards help redress that imbalance, he said.

  The money is to be disbursed after a due diligence stage, and it is to come in tranches tied to production goals and other benchmarks set by the commerce department, with officials expecting money to start flowing in at the end of this year.

  Intel’s award would be the “single-biggest announcement of a grant to any CHIPS recipient,” US Secretary of Commerce Gina Raimondo told reporters ahead of the news.

  The projects would create more than 30,000 construction and manufacturing jobs across four states, she said, adding that US$50 million of Intel’s award would specifically go into workforce development.

  The timeline for those jobs would vary from facility to facility, she said, adding that Intel’s construction plans remain in line with its initial projections.

  The first of several Arizona facilities would be operational by the end of this year, and the chipmaker expects the construction in Ohio to finish in late 2026, she said.

  The funding announced yesterday is focused solely on commercial production.

  However, Intel is also expected to receive about US$3.5 billion in funding for manufacturing of military and intelligence chips. That grant has thrown a wrench into broader CHIPS Act negotiations over the past few weeks, because the Pentagon pulled out from a plan to foot more than two-thirds of the bill.
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