US Commerce Secretary to Announce Subsidies for Chip Manufacturing
By the end of March, U.S. Commerce Secretary Gina Raimondo plans to name several major beneficiaries of subsidies for chip manufacturing plants, as part of the 2022 “Chips Act”. According to Bloomberg, tech giant Intel Corporation is set to receive more than $10 billion of these funds.
Sponsorship for Existing and New Chip Manufacturing Sites
Source information reveals Intel’s government support will be divided between direct subsidies and loans. The total funds available amount to $39 billion in direct subsidies and up to $75 billion in loans. No subsidies as large as those expected for Intel have been approved by U.S. authorities before. Projects in New Hampshire, Oregon, and Colorado involving BAE Systems and Microchip Technology have operated with much smaller budgets.
Intel Plans to Invest Heavily in New Facilities
It should be noted that even $10 billion doesn’t seem like significant support for Intel, considering the company is willing to invest $20 billion in building two factories in Oregon, another $20 billion for modernization and expansion of facilities in Arizona, and a further $3.5 billion for a project in New Mexico. Reports suggest that Intel could delay the launch of Ohio factories until 2026 due to delayed subsidy allocations. But, local official sources clarify that the project timeline depends on market conditions rather than subsidy allocation deadlines and that things remain within Intel’s original framework.
Local Economic Boost from Major Chip Manufacturers
Under President Biden’s administration, chip manufacturers have invested over $230 billion in the U.S. economy. By the President’s administration’s design, by 2030, at least two advanced technology chip production clusters should emerge in the country. Intel leadership has often articulated that they expect 20-30% of new project construction costs to be covered by subsidies. Given their budget, the company aims to maintain this ratio.
