US to hand Intel billions in grants and loans to expand US semiconductor plants

Intel has also indicated it plans to tap investment tax credits from the Treasury Department that could cover as much as 25% of capital expenditures, according to the Commerce Department

Intel CEO Pat Gelsinger has been trying to restore Intel’s technological capabilities. Picture: Leah Farrell / RollingNews.ie

The US will award Intel $8.5bn (€7.83bn) in grants and as much as $11bn (€10.13bn) in loans to help fund an expansion of its semiconductor factories, marking the largest award from a programme designed to re-invigorate the country's domestic chip industry.

The package will support more than $100bn (€92.08bn) in US investments from Intel, including efforts to produce cutting-edge semiconductors at large-scale plants in Arizona and Ohio, the US Commerce Department announced on Wednesday. 

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

Intel has had a presence in Ireland for the past 30 years and operates a major chip-making facility in Leixlip, Co Kildare.

In addition to Wednesday's announcement, Intel has indicated it plans to tap investment tax credits from the Treasury Department that could cover as much as 25% of capital expenditures, according to the Commerce Department.

On Wednesday, President Joe Biden will tour an Intel campus in Phoenix and announce a preliminary agreement with Intel for a major award from the 2022 Chips and Science Act. Intel is the first company to land a Chips Act funding deal for advanced chipmaking facilities. 

The Chips Act set aside $39bn (€35.91bn) in grants — plus loans and guarantees worth $75bn (€69.06bn) — to persuade chip companies to build factories on American soil. The goal is to reverse a decades-long shift of semiconductor production to Asia. 

Commerce secretary Gina Raimondo has said the US aims to produce one-fifth of the world’s advanced logic chips by the end of the decade, and that Intel’s investments are a key part of that goal. Intel shares rose in trading on Wednesday.

Intel will not get all of the funding right away. The money will take months if not years to be disbursed and will be contingent upon Intel meeting production goals and other benchmarks. Commerce officials, who expect money to start flowing by the end of this year, will have the ability to claw it back if Intel fails to meet those thresholds.

An administration official, who briefed reporters on condition of anonymity ahead of the announcement, declined to specify those milestones and said they will be further articulated as Intel progresses toward a final agreement.

For Intel, the facilities are part of an ambitious turnaround bid under chief executive 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 also has been trying to restore Intel’s technological capabilities. In recent years, the company had fallen behind Asian rivals Taiwan Semiconductor Manufacturing and Samsung Electronics  in that area. They too are stepping up US expansion plans and are expected to receive their own Chips Act awards in coming weeks.

• Bloomberg