Intel and the U.S. Department of Commerce announced on Wednesday that they have signed a preliminary agreement under which Intel will receive $8.5 billion in direct funding under the Chip and Science Act. Additionally, under the same law, Intel will be eligible for $11 billion in low-interest loans and a 25% investment tax credit on up to $100 billion in capital expenditures over the next five years. Funds raised from the long-awaited announcement will be used to expand or build Intel’s new semiconductor manufacturing facilities in Arizona, New Mexico, Ohio and Oregon, potentially creating up to 30,000 jobs.
“Today is a defining moment for America and Intel as we work to drive the next great chapter of American semiconductor innovation,” said Intel CEO Pat Gelsinger.”Artificial intelligence is driving the digital revolution, and everything digital requires semiconductors. Support from the CHIPS Act will help ensure Intel and the United States remain at the forefront in the era of artificial intelligence as we build a resilient and sustainable semiconductor supply chain to power our nation’s future.“
Intel is working on several important projects, including new semiconductor production facilities and advanced packaging facilities. On the fab side, there are three ongoing projects:
- First, Intel is expanding its chip production capabilities in Arizona (the desert campus of Silicon Valley) to build two additional fab modules capable of producing chips using Intel’s 18A and 20A production technologies at an estimated cost of approximately $20 billion.
- Second, the company is building a new Silicon Heartland campus in Licking County, near Columbus, Ohio. The massive project is expected to have a total investment of US$100 billion or more when fully developed, with an initial investment of approximately US$20 billion for the first two manufacturing modules, which are expected to be completed in 2027-2028.
- Third, Intel is expanding and upgrading its chip production and R&D capabilities at the Silicon Forest Park near Hillsboro, Oregon. In particular, the company recently began installing a $380 million high numerical aperture EUV tool at its D1X facility in Oregon.
In terms of advanced packaging facilities, Intel is about to complete the transformation of its two wafer fabs at its Silicon Mesa campus in New Mexico into advanced packaging facilities. These facilities will be critical to building the next generation of multi-chipset processors for customers, data centers and artificial intelligence applications in the coming years and will be the largest advanced packaging facility in the United States. At the same time, with advanced packaging capacity already in place in New Mexico, the state will focus a large amount of advanced packaging capacity to support Intel’s construction of leading fabs in Arizona, Ohio and Oregon.
In order to receive $8.5 billion in direct funding and $11 billion in low-interest, long-term loans, Intel must abide by terms set out in a so-called preliminary terms memorandum (PMT). The PMT provides that direct funding and federal loans are available only after thorough review and negotiation of detailed agreements. The financial awards are also contingent on achieving specific milestone goals, which are not made public but are thought to include provisions regarding investment, timing and workforce development. Ultimately, all of these funds are dependent on the availability of remaining CHIPS Act funds.
In addition to this direct financial assistance, Intel can receive a 25% tax credit on up to $100 billion in qualified capital expenditures over the next five years if it meets the U.S. government’s requirements.This would make Intel’s capital expenditures (the most expensive part of building and equipping chip factories) “cheaper” for the company and spur investment in the U.S.
“Through this agreement, we will help incentivize more than $100 billion of investment from Intel—one of the largest investments ever in U.S. semiconductor manufacturing—that will create more than 30,000 good-paying jobs and inspire the next generation of innovation,” said U.S. Commerce Secretary Gina Raimondo.”This announcement is the culmination of years of bipartisan efforts by President Biden and Congress to ensure that the cutting-edge chips we need to ensure our economy and national security are made in the United States“