• The Biden administration is in talks with Intel to provide over $10 billion in subsidies, including loans and grants, to boost semiconductor production.
  • These subsidies are part of the CHIPS Act, with $39 billion allocated by the U.S. Department of Commerce to promote semiconductor manufacturing.
  • Intel plans to invest significantly in building advanced factories in Oregon and expanding facilities in Arizona, totalling $40 billion, along with a $3.5 billion innovation project in New Mexico.

According to Bloomberg, citing people familiar with the matter, the Biden administration is negotiating with Intel Corp. to provide more than $10 billion in subsidies. The subsidies for Intel may include loans and direct grants, and negotiations are currently underway.

The U.S. Department of Commerce, responsible for overseeing funding under the CHIPS Act, had previously announced two smaller allocations. Commerce Secretary Gina Raimondo stated earlier this month that the department plans to make several allocations from the $39 billion in government funding allocated to promote semiconductor manufacturing within two months.

President Biden signed the CHIPS Act in August 2022, with a total size of $280 billion. Of this, $200 billion will be used for scientific research, $52.7 billion will be provided as subsidies to the chip industry, approximately $24 billion will be used for tax breaks for chip companies, and the remaining $3 billion will be used for projects developing cutting-edge technology and wireless supply chains.

Also read: Intel stock tumbles as chipmaker falls further behind in AI race

The proportion Intel will receive is unclear

According to sources, the U.S. government’s subsidies to Intel consist of two parts: direct subsidies and loan subsidies, which will be provided to Intel in a certain proportion. It is currently unclear what proportion Intel will receive, but the direct subsidies provided by the U.S. government amount to $39 billion, and the loan and loan guarantee subsidies amount to $75 billion.

Intel’s semiconductor investment plan is ambitious. The company plans to invest $20 billion to build two advanced factories in Oregon, and another $20 billion to modernise and expand its facilities in Arizona. In addition, $3.5 billion will be invested in an innovation project in New Mexico.

The Biden administration negotiates $10+ billion subsidies with Intel to boost semiconductor production, part of the CHIPS Act funding.