WASHINGTON — The Biden administration has reached an agreement to provide Intel with up to $8.5 billion in direct financing and $11 billion in loans for computer chip factories in Arizona, Ohio, New Mexico and Oregon.
President Joe Biden plans to discuss the investment on Wednesday while visiting the Intel campus in Chandler, Arizona, which could be a decisive swing state in the November election. He has often said that not enough voters know about his economic policies and suggested that more voters would support him if they did.
Commerce Secretary Gina Raimondo said the deal reached through her department would allow the United States to produce 20% of the world’s most advanced chips by 2030, up from the current level of zero. The United States is designing advanced chips, but its inability to produce them domestically has proven to be a threat to national security and the economy.
“Failure is not an option – advanced chips are at the core of our innovation system, especially when it comes to advances in artificial intelligence and our military systems,” Raimondo said during 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 told voters that his policies have led to a revival of 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 American factory jobs from China.
Biden narrowly defeated Trump in Arizona in 2020 by a margin of 49.4% to 49.1%.
American adults take a dim view 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 rating on the economy in July 2021.
Intel’s projects would be funded in part through the bipartisan CHIPS and Science Act of 2022, which the Biden administration helped push through Congress at a time of post-pandemic concerns that loss of access to Asian-made chips will hurt the U.S. economy a recession could plunge.
In pushing for the investment, lawmakers expressed concerns about China’s attempts to control Taiwan, which accounts for more than 90% of advanced computer chip production.
Senator Sherrod Brown of Ohio, a Democrat up for re-election this year, emphasized that his state would become “a world leader in semiconductor manufacturing” as Intel would generate thousands of jobs. Ohio has voted for Trump in the past two presidential elections, and Brown will face Republican Bernie Moreno, a Trump-backed businessman from Cleveland, in November.
Wednesday’s announcement is the fourth and largest yet under the chips law, with government support expected to allow Intel to make $100 billion in capital investments over five years. About 25% of that total would be for buildings and land, while roughly 70% would go to equipment, Intel CEO Pat Gelsinger said.
“We view 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 CEO said on a call with reporters that he would like to see a follow-up to the 2022 law to provide additional funding for the industry.
Biden administration officials say that without government support, computer chip companies would not invest domestically on the scale expected. Intel funding would create a total of 30,000 jobs in the manufacturing and construction sectors. The company also plans to claim Treasury tax credits 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 build two new chip factories and modernize an existing one. The funding will build two state-of-the-art manufacturing plants in New Albany, Ohio, just outside the state capital of Columbus.
The company will also convert two of its factories 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 deals to support businesses. Under the agreement with the Commerce Department, Intel will, among other things, commit to local training programs and increase the reimbursement amount for its child care program.