U.S. Government finalizes $7.86 billion subsidy for Intel's Chip projects

This subsidy will support Intel’s manufacturing projects across four U.S. states: Arizona, New Mexico, Ohio, and Oregon. The original subsidy amount was $8.5 billion, but it was reduced after Intel won a separate $3 billion award from the Pentagon.

This funding is part of a larger effort to bring more semiconductor manufacturing back to the United States. Intel’s manufacturing projects will help produce chips designed and made in the U.S. for the first time in many years, according to Commerce Secretary Gina Raimondo. 

This is a huge step towards increasing domestic production of vital chips used in everything from electronics to defense systems.

Intel’s $7.86 billion subsidy will play a key role in creating high-paying jobs and boosting local economies in the four states where the projects are based. This investment is part of a broader $90 billion initiative to strengthen America’s semiconductor industry. These projects will not only help Intel, but also support U.S. workers, as the chips will be manufactured and packaged by American workers at American factories.

Intel has already met several key milestones for its manufacturing projects. The company is set to receive at least $1 billion of the government grant before the end of December. 

A government official confirmed that the reduction in the subsidy is not linked to Intel’s recent financial struggles. The company has faced challenges, including narrowing profit margins and laying off thousands of employees.

The subsidy is part of a larger $52.7 billion funding initiative under the CHIPS Act, which aims to increase semiconductor production in the U.S. This includes $39 billion allocated for chip manufacturing and $11 billion for research into new technologies. 

The funding is designed to reduce America’s dependence on foreign-made chips and improve national security by securing domestic access to the technology.

In September, Intel also received a $3 billion contract from the U.S. Department of Defense. This funding comes from the $39 billion allocated for semiconductor manufacturing subsidies, which explains the reduction in Intel’s initial grant. 

Despite the reduction, Intel still remains a key player in America’s efforts to strengthen its semiconductor industry.

Intel’s CEO, Pat Gelsinger, praised the support from both political parties. He said the historic investment is essential for restoring American technology and manufacturing leadership. 

Gelsinger emphasized that this funding is not just about business growth, but about securing long-term economic stability and national security for the U.S.

Intel also decided not to accept a separate $11 billion low-cost government loan that was offered in March. The company explained that the loan’s terms were less favorable than expected and did not align with its long-term goals. Intel said it looks forward to discussing future loan options with the incoming administration.

Intel plans to take advantage of the Treasury Investment Tax Credit, which offers up to 25% of qualified investments. 

The company is expected to invest more than $100 billion into these semiconductor projects, making it eligible for these tax credits. This will further support Intel’s plans to boost U.S. chip manufacturing.

Secretary Raimondo also mentioned that the government is taking steps to protect taxpayer dollars. The subsidy agreement includes restrictions on stock buybacks for the next five years. Additionally, Intel will have to share any "meaningful" excess profits generated from these projects with the government, ensuring that the public gets a fair return on the investment.