Intel Secures $7.865 Billion in CHIPS Act Funding as US Ramps Up Semiconductor Production

The Biden administration has awarded Intel $7.865 billion under the CHIPS and Science Act, marking the largest allocation to date from the $39 billion set aside to bolster domestic semiconductor manufacturing.

While slightly less than the $8.5 billion initially earmarked for Intel earlier this year, the funding underscores the White House’s commitment to reshoring critical supply chains and fostering job creation across the United States.

“Today’s award marks another key step in implementing President Biden’s CHIPS and Science Act and the Investing in America agenda to reshore manufacturing, create thousands of good-paying jobs, and strengthen our economy,” said White House Deputy Chief of Staff Natalie Quillian in a statement announcing the grant.

Intel plans to use the funds to expand its semiconductor fabrication facilities in Arizona, New Mexico, Ohio, and Oregon. These projects are expected to create up to 30,000 jobs across all four states, including direct employment at the facilities and indirect roles in construction and supply chain services.

The funding also comes with conditions aimed at ensuring Intel prioritizes innovation and manufacturing over shareholder payouts. The company has pledged to avoid stock buybacks for five years—a measure likely intended to align with the CHIPS Act’s goal of strengthening the US semiconductor ecosystem.

Intel’s final funding amount was reduced due to a mix of factors, including delays in some of its project timelines and a separate $3 billion contract awarded in September to develop semiconductors for national security and military applications. Additionally, some of Intel’s expanded plans now extend beyond the CHIPS Act’s 2030 project deadline, prompting adjustments in the allocated amount.

Intel Scales Back Ambitions Amid Financial Struggles

The funding arrives at a challenging time for Intel, which has faced significant setbacks over the past year. The company recently reported a staggering $16.6 billion quarterly loss—its largest since its founding in 1968—and laid off over 15,000 employees.

Intel has also revised its growth strategy to reflect its financial realities. The company has reduced its planned US manufacturing investments from $100 billion over the next five years to $90 billion by 2030. Its expansion in Ohio, initially estimated to create 10,000 jobs, has been scaled back to 6,500 roles.

Despite these struggles, Intel remains a critical player in the US semiconductor industry. Its efforts to advance 18A process technology—considered vital for next-generation chip manufacturing—are seen as essential to maintaining the country’s technological edge.

CHIPS Act Funding Disbursement Accelerates Amid Looming Deadline

Intel’s award is part of the Commerce Department’s efforts to distribute $19 billion of the total $39 billion in CHIPS Act funding before the Trump administration takes office in January. The incoming administration has expressed plans to scale back the program, potentially reducing the scope of future investments in domestic semiconductor production.

With the Intel deal finalized, the Commerce Department has now reached agreements with six companies under the CHIPS Act, allocating nearly half of the available funding. More announcements are expected in the coming weeks as time runs short to obligate the remaining funds.

Challenges and Opportunities for Intel

The CHIPS Act funding provides a lifeline for Intel as it navigates a turbulent period marked by declining revenues, competitive pressures, and operational challenges. However, the company’s ability to meet its ambitious goals will depend on how effectively it utilizes the funds to regain technological leadership and improve its financial stability.

Reports that Qualcomm considered acquiring Intel further highlight the uncertainty surrounding the chipmaker’s future. While Qualcomm’s interest has reportedly cooled, Intel’s struggles have raised concerns about its long-term competitiveness in a rapidly evolving global semiconductor market.

Reshoring Semiconductor Manufacturing

The Biden administration’s push to reshore semiconductor manufacturing comes amid heightened concerns about US reliance on foreign suppliers, particularly in Taiwan and South Korea. The CHIPS Act is part of a broader strategy to secure critical supply chains and reduce vulnerabilities in the event of geopolitical disruptions.

Intel’s expanded facilities are expected to play a pivotal role in this effort as the US works to strengthen its position in the global semiconductor race.