Intel gets US govt funding for $100 billion revamp, expansion programme

Intel is embarking on a major expansion and upgradation programme, involving investment of $100 billion, by setting up manufacturing facilities in four US states and upgrading existing facilities, with financial support from the federal government.

The US government has committed $19.5 billion in federal grants and another $25 billion in tax breaks to supports Intel’s expansion plans.

The US government, last week, announced plans to provide the federal funds to Intel under the CHIPS Act.

Intel CEO Pat Gelsinger said the company will be building "the largest AI chip manufacturing site in the world" near Columbus, Ohio, as part of the five-year expansion programme.

Santa Clara, California-based Intel would also be revamping its facilities in New Mexico and Oregon, and expanding operations in Arizona, as part of a programme to revitalise semiconductor manufacturing in the United States.

The Biden administration is attempting a broader expansion aimed at enabling US semiconductor manufacturers regain their lost leadership.

Intel has , for decades, been the world leader in computer chip manufacturing with some of the smallest and fastest semiconductors for the global market, but lost out to Taiwanese manufacturers who now lead the global chip market.

The Biden administration wants to bring that glory back to Intel, in order to keep America’s position as the technology leader. 

For decades, Intel led the world in making the fastest and smallest semiconductors, selling them at a premium price and plowing the profits back into more research and development to stay ahead of the pack.

But Intel lost that manufacturing edge in the 2010s to TSMC and its profit margins plummeted as it cut prices to keep market share with inferior products.

Intel CEO Patrick Paul Gelsinger had, in 2021, sought government support for taking Intel back to its number one position. But for the government funds, Intel would be financing the $100 billion programme on its own. 

Intel would be revamping operations with new tools acquired from firms, including ASML, Tokyo Electron, Applied Materials, and KLA, among others. This will take almost70 per cent of the funds, Gelsinger said.

Intel currently provides direct employment to about 55,000 people and supports over 72,000 jobs indirectly in the US. The new investment would create more than 10,000 new permanent jobs at Intel and nearly 20,000 construction jobs, and support over 50,000 jobs, the company stated in a release.

Rival Taiwan Semiconductor Manufacturing Co, which is also building a massive factory in the US, also expects to receive funding under the CHIPS Act.