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The White House announced Wednesday that it will provide Intel with $8.5 billion in financing. through the CHIPS Act. The cash injection, Intel says, will fund sites in locations including the massive complex the company is building in Ohio, plants in Arizona and New Mexico, and its research and development facilities in Oregon.
The $52.7 billion CHIPS Act aims to return semiconductor manufacturing to the United States, reducing the country’s dependence on other countries for the processors that power everything from smartphones and laptops to infrastructure and military equipment.
“Today is a defining moment for the United States and Intel as we work to drive the next great chapter of American semiconductor innovation,” Intel CEO Pat Gelsinger said in a statement.
“AI is driving the digital revolution and everything digital needs semiconductors. Support from the CHIPS Act will help ensure Intel and the US remain at the forefront of the AI era as we build a resilient and sustainable semiconductor supply chain to power our nation’s future.”
President Biden signed the CHIPS Act into law in August 2022, setting aside $39 billion for manufacturing incentives. But cash distribution has been slow.
The financing announcement arrives just a day after Nikkei Asia reported that major suppliers of semiconductor chemicals to Intel and TSMC’s plans to build plants in Arizona are delaying construction of their own facilities due to higher-than-expected costs and a lack of available workers.
Last month, The Wall Street Journal reported that Intel is delaying the opening of its Ohio plant from 2025 to sometime between 2027 and 2028, due to slow chip sales. TSMC, the world’s largest semiconductor maker, has also pushed back the planned completion date of its own facility in Arizona, with the plant now beginning to build chips between 2027 and 2028.
The CHIPS Act funding comes at a crucial time for Intel. The company is in the midst of a major shift as it seeks to regain its position as the world’s most advanced semiconductor manufacturer from TSMC.
Part of that includes the company’s plan called “five nodes in four years.” Think of a node as a generation of chips. By moving from one node to another, you are probably taking a step forward in processing capabilities.
Gelsinger announced the “five-node” plan in 2021, and so far the company is on track to deliver on it next year with the introduction of its 18A node. Intel says that’s the chip that will put it back on top. It also announced the next generation of chips, the Node 14A.
However, it’s not just about processing nodes. Intel is also developing its foundry services business, which will allow it to manufacture semiconductors for third-party customers under a contract similar to TSMC’s business model.
In February, Intel announced that Microsoft (MSFT) will become one of its foundry customers, and that the chips will be built on Intel’s 18A node.
Despite those victories, Intel is struggling in the generative AI market, dominated by Nvidia (NVDA). On Monday, that company’s CEO, Jensen Huang, announced Nvidia’s next generation of AI chips as part of its annual GTC conference.
Nvidia stock has risen about 247% in the last 12 months thanks to the current AI boom. Meanwhile, Intel shares are up 41%. AMD (AMD), which designs both GPUs and CPUs, rose 85%.
Daniel Howley is Yahoo Finance’s technology editor. He has been covering the tech industry since 2011. You can follow him on Twitter. @DanielHowley.
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