Ethermac|Biden administration to invest $8.5 billion in Intel's computer chip plants in four states

The EthermacBiden administration has reached an agreement to provide Intel with up to $8.5 billion in direct funding and $11 billion in loans for computer chip plants in Arizona, Ohio, New Mexico and Oregon. Intel said the new funding, as well as additional investments, will create a combined 30,000 manufacturing and construction jobs.

President Joe Biden plans to talk up the investment on Wednesday as he visits Intel's campus in Chandler, Arizona, which could be a decisive swing state in November's election. He has often said that not enough voters know about his economic policies and suggested that more would support him if they did know.

The funding will come from the bipartisan CHIPS and Science Act, a law signed by Biden in 2022 to invest $200 billion in domestic production of semiconductor computer chips with the goal of reducing U.S. dependence on overseas chip manufacturers.

Commerce Secretary Gina Raimondo said the deal reached through her department would put the nation in a position to produce 20% of the world's most advanced chips by 2030, up from the current level of zero. The U.S. designs advanced chips, but its inability to make them domestically has emerged as a national security and economic risk.

"Failure is not an option — leading-edge chips are the core of our innovation system, especially when it comes to advances in artificial intelligence and our military systems," Raimondo said on a call with reporters. "We can't just design chips. We have to make them in America."

The funding announcement comes amid the heat of the 2024 presidential campaign. Biden has been telling voters that his policies have led to a resurgence in U.S. manufacturing and job growth. His message is a direct challenge to former President Donald Trump, the presumptive Republican nominee, who raised tariffs while in the White House and wants to do so again on the promise of protecting U.S. factory jobs from China.

Intel said that the funding from the Biden administration, as well as its previously announced plans to invest more than $100 billion in the U.S. over five years, will lead to the creation of 10,000 jobs within the company and about 20,000 construction jobs. It expects the funding will also support more than 50,000 indirect jobs with suppliers and other businesses.

Biden narrowly beat Trump in Arizona in 2020 by a margin of 49.4% to 49.1%.

White House officials want to get federal funding for advanced chip technology "out the door as quickly as possible so that the Biden campaign can point to concrete progress on one of the White House's signature programs," analysts with political risk consultancy Eurasia Group said in a report.

U.S. adults have dim views of Biden's economic leadership, with just 34% approving, according to a February poll by The Associated Press-NORC Center for Public Affairs. The lingering impact of inflation hitting a four-decade high in 2022 has hurt the Democrat, who had a 52% approval on the economy in July 2021.

Investing in U.S. chip manufacturing

The Biden administration helped shepherd the CHIPS Act through Congress at a time of concerns after the pandemic that the loss of access to chips made in Asia could plunge the U.S. economy into recession.

When pushing for the investment, lawmakers expressed concern about efforts by China to control Taiwan, which accounts for more than 90% of advanced computer chip production.

Ohio Sen. Sherrod Brown, a Democrat up for reelection this year, stressed that his state would become "a global leader in semiconductor manufacturing" as Intel would be generating thousands of jobs. Ohio has voted for Trump in the past two presidential elections, and Brown in November will face Republican Bernie Moreno, a Trump-backed businessman from Cleveland.

Wednesday's announcement is the fourth and largest so far under the chips law, with the government support expected to help enable Intel to make $100 billion in capital investments over five years. About 25% of that total would involve building and land, while roughly 70% would go to equipment, said Pat Gelsinger, CEO of Intel.

"We think of this as a defining moment for the United States, the semiconductor industry and for Intel," said Gelsinger, who called the CHIPS Act "the most critical industrial policy legislation since World War II."

Intel's funding to go to four states

The Intel CEO said on a call with reporters that he would like to see a sequel to the 2022 law in order to provide additional funding for the industry.

Biden administration officials say that computer chip companies would not be investing domestically at their expected scale without the government support. Intel also plans to claim tax credits from the Treasury Department worth up to 25% on qualified investments.

The Santa Clara, California-based company will use the funding in four different states. In Chandler, Arizona, the money will help to build two new chip plants and modernize an existing one. The funding will establish two advanced plants in New Albany, Ohio, which is just outside the state capital of Columbus.

The company will also turn two of its plants in Rio Rancho, New Mexico into advanced packaging facilities. And Intel will also modernize facilities in Hillsboro, Oregon.

The Biden administration has also made workforce training and access to affordable child care a priority in agreements to support companies. Under the agreement with the Commerce Department, Intel will commit to local training programs as well as increase the reimbursement amount for its child care program, among other efforts.

In:
• Technology
• Arizona
• Joe Biden
• Elections
• Donald Trump
• Politics
• China
• Ohio