Intel allocated up to $8.5 billion from the CHIPS Act, with loans available

The White House said Intel received up to $8.5 billion in CHIPS Act funding as the Biden administration ramps up efforts to bring semiconductor manufacturing domestically.

Intel could receive an additional $11 billion in loans from the CHIPS and Science Act, which was passed in 2022. The awards will be announced by President Joe Biden in Arizona on Wednesday.

The money will help “leading semiconductors made in the United States” keep “America at the forefront of innovation,” U.S. Commerce Secretary Gina Raimondo said on a call with reporters. Intel and the White House said their agreement is non-binding and preliminary and subject to change.

Intel has long been the undisputed leader in the US semiconductor industry, developing the chips that power many of the world’s computers and data center servers. However, the company is overshadowed by revenue Nvidiawhich leads in artificial intelligence chips and is surpassed in market capitalization by a competitor AMD and a manufacturer of mobile phone chips Qualcomm.

Even with its slide relative to its peers, Intel is uniquely positioned in the industry because it operates chip factories, or fabs, in addition to designing processors. AMD and Nvidia are fabless, meaning they design the chip, then ship computer files and staff to Taiwan TSMC for the manufacture of the device.

TSMC has dominated the lead in semiconductor manufacturing in recent years, so all of the world’s fastest processors are physically built in Taiwan.

That’s a big reason why Intel was long expected to be one of the biggest beneficiaries of the CHIPS (Creating Useful Incentives for Semiconductor Manufacturing) Act, which was aimed at unlocking nearly $53 billion in domestic technology incentives for chips. A major motivation behind the CHIPS Act was to encourage companies to build factories on US soil to prevent supply disruptions if China ever invaded Taiwan.

Intel said it will spend its CHIPS Act funds on factories and research centers in Arizona, Ohio, New Mexico and Oregon. The company previously announced plans to spend $100 billion on US programs and facilities. Intel announced plan to catch up in flagship manufacturing by 2026.

Intel’s Ohio factory will cost more than $20 billion and Intel said it is expected to begin production in 2027 or 2028. Intel is also expanding manufacturing operations in Arizona and New Mexico. Intel says the projects will create 20,000 factory manufacturing jobs and 10,000 chip manufacturing jobs.

The Ohio factory will produce AI chips for Intel, as well as potentially produce AI chips for other semiconductor companies, Intel CEO Pat Gelsinger said on a call with reporters.

“Go to the Ohio site,” Gelsinger said. “There are a lot of cranes and concrete trucks building what we believe will become a premier place for manufacturing at scale, especially for AI chips in America.”

GlobalFoundriesMicrochip and BAE Systems have already received money from the CHIPS Act, according to the to the Semiconductor Industry Association. TSMC is expected to receive CHIPS Act funds for a factory in Arizona that will be used for An apple and AMD chips.