Biden is giving Intel $8.5 billion for big semiconductor projects in 4 states

President Joe Biden is set to announce a deal with Intel that will give the chipmaker up to $8.5 billion in grants and another $11 billion in loans to build semiconductor plants in four states — the biggest announcement to date in his push to bring chips manufacturing back to America.

The funding comes from the CHIPS and Science Act passed by Congress in 2022 to pour more than $52 billion into projects to dramatically boost U.S. production of the tiny electronic devices found in everything from cars to cell phones to military weapons.

The deal with Intel — which is preliminary and still involves due diligence to finalize — will see the company invest more than $100 billion of its own money into the projects. Intel expects to offset that investment by claiming as much as $25 billion in investment tax credits, the company's CEO Pat Gelsinger told reporters.

These are the kinds of jobs Biden has been campaigning on

All told, the White House said the Intel projects will create nearly 30,000 construction and factory jobs. They are an example of the kinds of jobs he is campaigning on as he makes his pitch for a second term — jobs made possible by his brand of government intervention in the private sector, an industrial policy that had fallen out of fashion for decades.

Lael Brainard, Biden's top economic policy adviser, described the Intel investment as part of a breakthrough in U.S. manufacturing, noting the company had started out building semiconductors in the United States but later left for countries that chose to invest in the sector. The lack of a domestic industry and reliance on imports was to blame for price spikes and shortages of cars and appliances seen during the pandemic, she said.

Biden is announcing the funding during a swing through two swing states that are key to his reelection campaign — Arizona and Nevada — where he is trying to change the perception that the economy was better under the policies of former President Donald Trump, his opponent in November.

Biden is casting the investments in manufacturing as one of a series of things he has done to help the economy rebound since he took over from Trump.

"As I travel the country, folks often tell me how back in 2020, they were down, they lost their business, they lost faith in the system but then the laws we passed, the work we've done together, got them back on their feet," Biden said in Las Vegas on Tuesday.

These plants will make a kind of chip not currently made in the United States

The investment by Intel will give the United States a foothold in leading-edge logic chips — the kind of semiconductors used for artificial intelligence and military systems. Right now, these chips are all made overseas.

Commerce Secretary Gina Raimondo told reporters she wants to see 20% of these advanced chips made in the United States by 2030, and said the Intel projects would make that achievable.

"We rely on a very small number of factories in Asia for all of our most sophisticated chips. That's untenable and unacceptable. It's an economic security problem. It's a national security problem. And we're going to change that," she said.

The company will build two new plants in each of Chandler, Ariz. and New Albany, Ohio, and will modernize a fifth existing plant in Arizona.

It's a big government program, but it may not be enough, Intel's CEO says

In New Mexico, Intel will overhaul two plants to make them into specialized advanced packaging facilities — another capability that is not currently available domestically, Raimondo told reporters. Intel will also expand and modernize its research and development facility in Oregon.

The deal involves $50 million funding for training workers, agreements on using union labor, and arrangements for providing childcare to employees, the White House said.

Despite the massive investment in the sector from the CHIPS legislation, it may not be enough, said Pat Gelsinger, CEO of Intel, who suggested a "CHIPS II" infusion of government aid may be needed down the road.

"I don't think CHIPS I is the end of what we need to do to rebuild the industry," he told reporters. "It took three decades for this industry to sediment away from the United States and the Western world. It doesn't get fixed in one three to five year program. I do think more is required," he said.

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