President Biden’s push to expand domestic production of logic chips could net Intel $8.5 billion from the federal government to help Intel’s Rio Rancho campus complete the modernization of two fabs into advanced packaging facilities and support additional Intel projects in Arizona, Oregon and Ohio.
The company and the Biden-Harris administration have reached a “preliminary memorandum of terms” making that direct funding and an additional $11 billion in loans available to Intel, according to an announcement from the US Dept. of Commerce earlier this morning.
“AI is supercharging the digital revolution and everything digital needs semiconductors. CHIPS Act support will help to ensure that Intel and the U.S. stay at the forefront of the AI era as we build a resilient and sustainable semiconductor supply chain to power our nation’s future,” Intel’s CEO Pat Gelsinger said in a statement this morning.
The funding comes from the CHIPS and Science Act, a federal law passed by Congress and signed into law by Biden in 2022. At the time of the bill’s signing, the White House stated, “America invented the semiconductor, but today produces about 10 percent of the world’s supply—and none of the most advanced chips. Instead, we rely on East Asia for 75 percent of global production.” Biden highlighted the CHIPS and Science Act in his recent State of the Union address as an example of America reclaiming its position as an international leader in science and technology.
When the Act was passed, US Senator Martin Heinrich (D) foretold that the programs in the bill would have an outsized impact on New Mexico: “This bipartisan legislation will serve as a launchpad for scientific innovation and manufacturing at places like Intel in Rio Rancho, and allow America to maintain our competitive leadership over China. The bill delivers resources to support the work of our National Labs in New Mexico, including protecting America’s national security interests. And when it comes to New Mexico families, this legislation will ease inflation by addressing supply chain backlogs for everything from washer and dryers to cars, all while bringing these costs down.”
The funds will not be available immediately, however. The current announcement of terms will be followed by months of due diligence to evaluate Intel’s expansion plans against the law’s eligibility requirements.
Intel, however, is already moving forward with its expansion in Rio Rancho and the three other US locations. In 2021, Governor Michelle Lujan Grisham and Intel executives had announced that the company planed to invest $3.5 billion in upgrading the Rio Rancho site and that work is already underway. According to the governor’s office, changes to the state’s Local Economic Development Act (LEDA) to allow for a portion of construction-related Gross Receipts Tax to be rebated back to companies for large, significant, job-creating projects contributed to Intel’s decision to reinvest in Rio Rancho, extending the life of that plant and the local jobs it supports.
“Today’s announcement is a massive step towards ensuring America’s leadership in manufacturing for the 21st century. With this agreement, we are helping to incentivize over $100 billion in investments from Intel – marking one of the largest investments ever in U.S. semiconductor manufacturing, which will create over 30,000 good-paying jobs and ignite the next generation of innovation,” said U.S. Secretary of Commerce Gina Raimondo. “This announcement is the culmination of years of work by President Biden and bipartisan efforts in Congress to ensure that the leading-edge chips we need to secure our economic and national security are made in the U.S.”
Over the course of the next five years, Intel expects its investments in the United States to exceed $100 billion, as it expands capacity and capabilities in Arizona, New Mexico, Ohio, and Oregon, estimated to directly create over 10,000 manufacturing jobs and nearly 20,000 construction jobs. The Rio Rancho campus expansion is expected to support 700 permanent jobs and over 1,000 construction jobs.