Intel's CHIPS Act award package exceeds $10 billion, payout expected within two weeks: Report

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Over a $10+ billion subsidies + loans package

Intel
(Image credit: Intel)

According to a Bloomberg report that cites people familiar with the matter, ' the U.S. government is in discussions to provide Intel with over $10 billion in subsidies under the CHIPS and Science Act.' If the information is accurate, this will be the most significant award package announced under the act designed to revitalize domestic semiconductor production.

Intel's potential financial package is expected to consist of loans and direct grants, although the exact distribution between these is still under negotiation. The funding is a segment of the larger $39 billion in direct grants and $75 billion in loans and guarantees allocated by the CHIPS Act to entice top semiconductor firms to establish manufacturing bases in the U.S. Neither Intel nor the U.S. Commerce Department has formally confirmed the $10 billion package. Meanwhile, Intel has been a candidate to receive billions in subsidies from the U.S. government for a while.

The Bloomberg report states that since President Joe Biden's tenure began, chip companies have poured over $230 billion into U.S. investments. The administration aims to create at least two advanced manufacturing clusters on American soil by the decade's end. So far, the plan has been a success.

Intel is building up its first brand-new site in decades in Ohio, which is expected to require investments of over $100 billion to be fully built. The project requires about $20 billion in initial investments in the first two fabs. While the project might be delayed by a year or two, it will still become operational this decade. In addition, Intel is investing $20 billion in Arizona expansion and $3.5 billion in its New Mexico site. Meanwhile, the company's expansion plans hinge on the anticipated government funding.

In addition to Intel, TSMC has established its first campus in Arizona to produce chips on some of its most advanced manufacturing nodes. The company will start with 4nm and 5nm-class process technologies and then expand the campus to make 3nm-class chips. Yet again, the project entirely depends on government funding.

GlobalFoundries, Micron, Samsung, Texas Instruments, and several other chipmakers are also expanding their presence in the U.S. due to anticipated support from the government.

The U.S. Commerce Department has already distributed smaller CHIPS Act grants to other companies and anticipates more substantial announcements in the upcoming months.

Anton Shilov
Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

9 Comments Comment from the forums
  • PEnns
    A few thoughts on this subject.

    I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

    And does a behemoth like Intel need that much industrial welfare to build factories here...while Intel is busy opening factories outside the US (Germany, Israel, etc come to mind) while getting similar welfare and tax cuts there as well?
    Reply
  • ezst036
    It's a great day to be a lobbyist for a special interest. I clearly chose the wrong career path.
    Reply
  • spongiemaster
    PEnns said:
    A few thoughts on this subject.

    I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?
    I have never heard about anyone complaining that other countries shouldn't payout subsidies. They happen all the time in many industries. Who specifically are you talking about when you say the US?

    Leading edge fabs reportedly cost about $20 billion each. $10 billion isn't nearly as much as it sounds when applied to the process of building fabs. TSMC, which isn't even a US company, has requested $15 billion from the CHIPS act.

    When the PC market bottomed out a year ago, Intel delayed/cancelled a number of their fab construction projects to cut costs. Semiconductor production is a vital industry today, and it is in our interests that these projects continue on schedule.
    Reply
  • thisisaname
    PEnns said:
    A few thoughts on this subject.

    I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?

    And does a behemoth like Intel need that much industrial welfare to build factories here...while Intel is busy opening factories outside the US (Germany, Israel, etc come to mind) while getting similar welfare and tax cuts there as well?
    Looking at Intel's share price then yes they need all the help they can get. Though
    Reply
  • tooltalk
    PEnns said:
    I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?
    Sure, the US is just giving back some of its medicine to China.

    There are different kinds of subsidies prohibited under China's WTO 2001 Accession Protocol: export subsidies, or import substitution. Otherwise, nobody really cares how your govt pisses away taxpayers money domestically -- so long as they don't cross borders or distort international trade. China never really bothered to comply with these rules and there was really nothing the WTO's ineffective dispute system or anybody could do to stop China. So instead, the US is now reciprocating China's illegal subsidies with unilateral actions of their own -- illegal industrial subsidies and export control.
    Reply
  • Constellar
    spongiemaster said:
    I have never heard about anyone complaining that other countries shouldn't payout subsidies. They happen all the time in many industries. Who specifically are you talking about when you say the US?

    Leading edge fabs reportedly cost about $20 billion each. $10 billion isn't nearly as much as it sounds when applied to the process of building fabs. TSMC, which isn't even a US company, has requested $15 billion from the CHIPS act.

    When the PC market bottomed out a year ago, Intel delayed/cancelled a number of their fab construction projects to cut costs. Semiconductor production is a vital industry today, and it is in our interests that these projects continue on schedule.
    What's remarkable are the people who fail to see this fact. Indeed, they, like Nikki Haley, complain that the Chips & Science Act "subsidizes slow and old American companies, as the Chinese zoom right past them serving the largest market in the world", apparently not aware that the Chinese state banks are bankrolling and subsidizing China fabs issuing much more money. The $56B set aside for the Chips Act is only the beginning if we are to subsidize at the same rate China is.
    I'm glad Intel is getting their $10B and can't wait until they get $10B more! Sure, Intel was being run by a spineless knucklehead three years ago, but Intel is back now and not nearly as risk averse as before. They are deserving of the funds.

    What is so troubling though is the regulations imposed upon Intel, micron, TSMC, and Samsung. Poor companies... Right after the Chips Act was signed, Biden went in and demanded woke politics in exchange for the funding. The only thing the govt seems to care about is that they hire basketball dribblers in this silly and expensive push for DEI.
    Like I said, poor semiconductor fabs... :(
    Reply
  • Constellar
    Yes, Tooltalk, you're correct -- the WTO is hardly a very effective enforcement arm. In fact, back in 2000, China was banned from doing forced technology transfers if China wanted to join the WTO.
    However, there's nothing that says that Chinese JVs or men in the middle (the intermediary liaison who acted and acts on behalf of the Chinese government) can't imply that IP must be transferred as a condition of doing business in China. And indeed, the latest report from the commerce department aptly demonstrates that the number one concern of American tech companies doing business there is the transfer of their IP; contracts aren't signed so there's no paper trail, but it becomes known that the technology has been transferred when the American concern builds its factory on Chinese real estate. They must do this; they must agree to transfer their IP, or suffer being left out of this large international market. And there's nothing the WTO can do about it... :(
    Reply
  • scottslayer
    PEnns said:
    I thought the US gets really upset and frowns sternly when say, China, subsidizes its industries. But now the US is doing the same?
    Wait until you find out that the Chinese companies with or without subsidies are really technically owned by the government and have to jump when they say frog.
    Reply
  • tooltalk
    Constellar said:
    However, there's nothing that says that Chinese JVs or men in the middle (the intermediary liaison who acted and acts on behalf of the Chinese government) can't imply that IP must be transferred as a condition of doing business in China.
    The fact of China's restrictive regulation, "Foreign Equity Joint Venture Law" that allows forced tech transfer in itself is a violation of the WTO rules. This was already called out many times before. The latest, for instance, in 2018, the EU Commission complained in WT/DS549 that:
    ...
    In particular, the European Union considers that:(1) The Regulations for the Implementation of the Law of the People's Republic of China onChinese-Foreign Equity Joint Ventures ("JV Regulation") operating separately or together withother listed instruments, notably the Law of the People's Republic of China on Chinese-ForeignEquity Joint Ventures ("JV Law"), is inconsistent with China's commitments under Paragraph7.3 of Part I of the Protocol on the Accession of the People's Republic of China2 ("AccessionProtocol") and Paragraph 1.2 of Part I of the Accession Protocol, which incorporates the commitments under Paragraph 49 and Paragraph 203 of the Report of the Working Party onthe Accession of the People's Republic of China to the WTO3 ("Working Party Report"). This is2 WT/L/432.3 WT/ACC/CHN/49.WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1- 5 -because China conditions the right of a foreign investor to invest in China upon the transferof certain technology to the joint venture with a Chinese partner
    China's 2001 WTO Accession Protocol:
    General Provision, Section 7. Non-Tariff Measures, Paragraph 3:
    (3) China shall, upon accession, comply with the TRIMs Agreement, without recourse to theprovisions of Article 5 of the TRIMs Agreement. China shall eliminate and cease to enforce trade andforeign exchange balancing requirements, local content and export or performance requirements madeeffective through laws, regulations or other measures. Moreover, China will not enforce provisions ofcontracts imposing such requirements. Without prejudice to the relevant provisions of this Protocol,China shall ensure that the distribution of import licences, quotas, tariff-rate quotas, or any othermeans of approval for importation, the right of importation or investment by national and sub-nationalauthorities, is not conditioned on: whether competing domestic suppliers of such products exist; orperformance requirements of any kind, such as local content, offsets, the transfer of technology,export performance or the conduct of research and development in China.
    Reply