White House announces almost $20b in loans, grants to boost Intel chip production

The White House unveiled almost $20 billion in new grants and loans Wednesday to support Intel's US chip-making facilities, marking the Biden administration's largest funding announcement yet as it tackles China's dominance of the crucial technology.

President Joe Biden's decision to make the announcement during a trip to Arizona underscores his strategy of highlighting legislative achievements in key battleground states ahead of November's presidential rematch against Donald Trump.

The southwestern state was one of the tightest races of 2020, with Biden winning by just 10,457 votes.

Winning it in 2024 could prove crucial for Biden, who faces a tough reelection fight as he seeks to convince voters still skeptical about his economic record, despite strong recent growth and job creation data, persistently low unemployment, and slowing inflation.

"The Department of Commerce has reached a preliminary agreement with Intel to provide up to $8.5 billion in direct funding along with $11 billion in loans under the CHIPS and Science Act," the White House said in a statement.

The money "will support the construction and expansion of Intel facilities in Arizona, Ohio, New Mexico, and Oregon, creating nearly 30,000 jobs and supporting tens of thousands of indirect jobs," it added.

Largest CHIPS funding announcement

Wednesday's $8.5 billion direct funding announcement is the largest of any grant made so far under the $52.7 billion 2022 CHIPS and Science Act, US Commerce Secretary Gina Raimondo told reporters ahead of the announcement.

The money will help incentivize Intel to make more than $100 billion worth of investments, which will be one of the largest investments ever in US semiconductor manufacturing, she said.

It puts the US on track to meet its target of producing 20 percent of the world's cutting-edge chips by 2030, up from zero percent today, she added.

"We rely on a very small number of factories in Asia for all of our most sophisticated chips. That's untenable and unacceptable," she said.

"It's an economic security problem. It's a national security problem. And we're going to change that," she added.

Intel also plans to claim the US Treasury Department's Investment Tax Credit of up to 25 percent on some capital expenditures, according to the White House, which would significantly increase the amount of financial support it receives from the US government.

The tax credit is linked to a separate Biden administration policy -- also adopted in 2022 -- called the Inflation Reduction Act.

'Comeback story'

"Intel's investment is an exciting part of America's comeback story, with leading edge semiconductor manufacturing coming back to America for the first time in 40 years," Biden's National Economic Advisor Lael Brainard told reporters on the same call.

"With support from the CHIPS Act, Intel's $100 billion investment is delivering on President Biden's promise to build the future of the semiconductor industry right here in America, with American workers," she added.

The new funding will create 10,000 new manufacturing roles and 20,000 construction jobs, many of them unionized, Brainard said.

The White House estimates the investment will directly support at least 10,000 new jobs in both Arizona and Ohio, of which 3,000 roles in each state will be in manufacturing, and the remaining 7,000 will be in construction.