Biden Administration’s Historic Investment in Intel to Revitalize U.S. Semiconductor Industry
March 20 2024 - 5:40AM
IH Market News
The Biden administration has unveiled a monumental plan to
inject nearly $20 billion in grants and loans into Intel
(NASDAQ:INTC), aiming to significantly enhance the United States’
semiconductor chip production capabilities. This ambitious
initiative marks the government’s most substantial commitment yet
to fostering advanced chip manufacturing on American soil.
President Biden is set to announce an initial agreement that
allocates $8.5 billion in grants and provides for up to $11 billion
in loans to support Intel’s operations in Arizona. The funding is
earmarked for the construction of two new factories and the
modernization of an existing facility, underscoring the
administration’s resolve to bolster domestic semiconductor
manufacturing.
Commerce Department Secretary Gina Raimondo heralded the move as
a “huge deal,” emphasizing its potential to dramatically increase
the U.S.’s stake in leading-edge semiconductor production from
virtually zero to an estimated 20% by 2030. This surge is largely
attributed to the government’s subsidy program, designed to
mitigate the country’s dependency on semiconductor imports from
China and Taiwan.
The investment is a cornerstone of the 2022 CHIPS and Science
Act, which aims to rejuvenate the U.S. semiconductor industry with
$52.7 billion in funding. This includes $39 billion in production
subsidies and $11 billion dedicated to research and development
efforts.
With global semiconductor manufacturing capacity in the U.S.
having dwindled from 37% in 1990 to just 12% in 2020, this
initiative represents a critical step towards reclaiming a
leadership position in the high-tech sector. It also serves as a
strategic move to secure the nation’s supply chains and enhance its
technological sovereignty.
The announcement holds significant political implications as
well, particularly in the pivotal swing state of Arizona, where
Biden seeks to consolidate support ahead of the upcoming electoral
showdown against former President Donald Trump. Moreover, the
investment is poised to bolster Democratic efforts to retain a
crucial Senate seat and make gains in competitive House races
within the state.
For Intel, this financial boost comes at a crucial time,
offering a lifeline amidst recent forecasts of potential revenue
shortfalls due to uncertain demand in its core markets. It also
follows a series of government investments in other key players
within the semiconductor industry, including a $1.5 billion award
to GlobalFoundries and $162 million in grants to Microchip
Technology.
This historic outlay for Intel is not just an investment in a
single company but a strategic bet on the future of American
innovation, national security, and economic competitiveness in the
increasingly critical field of semiconductor technology.
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