White House Unveils Proposal for $8.5B Funding to Boost Intel's Domestic Chip Manufacturing

Before President Joe Biden enacted the CHIPS and Science Act in August 2022, Intel stood as a pivotal player in the U.S. push for enhanced domestic chip manufacturing. Recently, the White House revealed a collaborative agreement with the Department of Commerce that could allocate up to $8.5 billion to bolster U.S.-based production for the semiconductor giant.

The CHIPS Act emerged as a response to critical geopolitical challenges. Firstly, the supply chain disruptions stemming from Asia, particularly from the pandemic's early stages, have severely impacted global manufacturing. Additionally, the escalating tensions between the U.S. and China, heightened during the previous administration and persisting today, have underscored the urgency for domestic production.

Currently, Asia—especially Taiwan—dominates global semiconductor production. The island's semiconductor powerhouse, TSMC, alongside extensive manufacturing operations in Chinese cities such as Shenzhen, brought major sectors, including smartphones and automotive, to a standstill during initial lockdowns. This scenario, coupled with efforts to revitalize U.S. manufacturing, prompted initiatives aimed at reshoring production. Intel, having lost significant ground in the smartphone sector, is now keen to actively participate. While the CHIPS Act was progressing through Congress, Intel unveiled plans for a groundbreaking $10 billion manufacturing facility near Columbus, Ohio—a strong vote of confidence in U.S. manufacturing capabilities and the emergence of tech hubs beyond traditional cities like San Francisco and New York.

Intel anticipates investing tenfold that amount in the next five years, focusing on expansion in Arizona, New Mexico, and Oregon alongside Ohio. The company expects these efforts to generate 20,000 construction jobs and 10,000 manufacturing positions, aligning with the administration's emphasis on robust job growth.

Furthermore, local production by a U.S.-based company can ease supply chain bottlenecks by placing manufacturing nearer to consumption points. These elements might serve as significant talking points for incumbents during an election year.

“Through this agreement, we are helping to catalyze more than $100 billion in Intel investments—marking one of the largest commitments in U.S. semiconductor history, which will create over 30,000 well-paying jobs and fuel the next wave of innovation,” stated U.S. Secretary of Commerce Gina Raimondo in a press release.

However, the adequacy of government efforts to level the playing field between domestic chip manufacturers and their competitors remains a topic of debate. Many industry experts have indicated that, while these initiatives are promising, they fall short of bridging the gap with industry leaders like TSMC. Additionally, the timeline for many new factories to become operational must be considered.

Interestingly, Intel has recently postponed the manufacturing start date for its New Albany, Ohio facility by two years to 2027, citing shifts in the business landscape. In the meantime, the company has invested $1.5 billion and employed 69 workers from 14 Ohio counties. Workers from 75 of the state’s 88 counties are currently contributing to the construction efforts—figures that, as of now, do not significantly impact job reports.

Plans are also in place for additional manufacturing sites in Chandler, Arizona; Rio Rancho, New Mexico; and Hillsboro, Oregon.