The Biden administration is planning to reduce part of the $8.5 billion in federal funding allocated to Intel for building computer chip plants across the U.S., according to three sources who spoke on condition of anonymity to discuss private discussions.
This reduction is primarily due to the $3 billion Intel is also receiving to supply chips to the military. In March, President Joe Biden announced a deal offering Intel up to $8.5 billion in direct funding and $11 billion in loans.
The adjustments to Intel’s funding are not connected to the company’s financial performance or achievements, the sources revealed. In August, Intel announced plans to cut 15% of its workforce, roughly 15,000 jobs, as part of an effort to improve its business and compete with more successful rivals like Nvidia and AMD.
Unlike some competitors, Intel both designs and manufactures its own chips.
Two years ago, President Biden praised Intel for its job creation efforts when the company announced plans to build a new plant near Columbus, Ohio. The president commended Intel for its initiative to “build a workforce of the future” with the $20 billion project, which was expected to create 7,000 construction jobs and 3,000 full-time positions, with an average annual salary of $135,000.
Intel’s funding is linked to the CHIPS and Science Act, a major 2022 law that President Biden has praised for its goal of revitalizing U.S. semiconductor manufacturing. The $280 billion package aims to strengthen U.S. military technology and manufacturing capabilities, while also reducing the kind of supply chain disruptions that occurred in 2021 due to a global chip shortage, which affected factory production lines and contributed to inflation.
The Biden administration played a key role in advancing the legislation, which was driven by concerns during the pandemic that the U.S. economy could face a recession due to a lack of access to chips made in Asia. Lawmakers also raised concerns about China’s efforts to control Taiwan, which produces over 90% of the world’s advanced computer chips.
In August, the Biden administration committed up to $6.6 billion to help a Taiwanese semiconductor company expand its operations in Arizona. This funding aims to ensure that the most advanced microchips are produced domestically for the first time. The U.S. Commerce Department explained that the funding would allow Taiwan Semiconductor Manufacturing Co. (TSMC) to build on its existing plans for two facilities in Phoenix and add a third, newly announced production site.
The administration has pledged tens of billions of dollars to support the construction of chip manufacturing plants in the U.S. and reduce dependence on Asian suppliers, which the U.S. views as a security vulnerability.
