LOS ANGELES — The Biden administration is considering a reduction in part of the $8.5 billion federal funding allocated to Intel for its computer chip manufacturing facilities across the nation, as revealed by three sources who requested anonymity to discuss details privately.
This potential cutback is primarily attributed to the additional $3 billion Intel is set to receive for supplying chips to the military. Back in March, President Biden announced a financial package for Intel that included up to $8.5 billion in direct support along with $11 billion in loans.
According to the insiders, the adjustments to Intel’s funding are not linked to the company’s performance or financial benchmarks. In August, Intel disclosed plans to downsize its workforce by 15%, equating to around 15,000 positions, a move designed to reposition the company in a competitive landscape that includes stronger players such as Nvidia and AMD.
In contrast to some competitors, Intel not only designs semiconductor chips but also manufactures them. Two years ago, President Biden praised Intel for its initiative to establish a new manufacturing facility near Columbus, Ohio, which he said would help generate 7,000 construction jobs and 3,000 permanent positions with an average salary of $135,000 annually, highlighting the company’s role as a job creator in the sector.
Intel’s financial backing is linked to the CHIPS and Science Act, a comprehensive legislation enacted in 2022 with the aim of rejuvenating semiconductor production in the U.S. President Biden has promoted this $280 billion initiative as a means to bolster the U.S. position in both military technology and manufacturing, while addressing the disruptions in the supply chain that occurred during the pandemic. Specifically, the 2021 chip shortage had significant ramifications, halting factory production and contributing to inflationary pressures.
The Biden administration took an active role in promoting this legislation, spurred by concerns that reliance on Asian-made chips could jeopardize the U.S. economy. Of particular concern to lawmakers was China’s influence over Taiwan, which is responsible for over 90% of the world’s advanced chip production.
Additionally, in August, the administration committed up to $6.6 billion to support Taiwan Semiconductor Manufacturing Co. in its expansion efforts within Arizona, thereby facilitating domestic production of the latest microchips for the first time. The Commerce Department stated that this funding will enable the company to expand its existing plans for two facilities in Phoenix, as well as introduce a new production site.
The administration has pledged significant investments to back the development of U.S. chip foundries, striving to decrease dependence on Asian manufacturers, which the government views as a potential security risk.