The White House plans to curtail a multi-billion dollar subsidy for chipmaker Intel as the company dials back on construction projects following record-breaking losses.
The manufacturer was the largest beneficiary of the Biden-Harris administration’s 2022 CHIPS and Science Act (CHIPS Act), being awarded $8.5 billion in grants and up to $11 billion in subsidized loans as part of the legislation’s $39 billion domestic semiconductor production push. Now, the White House has dialed back its funding to less than $8 billion following Intel’s decision to delay private investments in Ohio manufacturing facilities after posting a $16.6 billion quarterly loss in October, according to The New York Times.
The Biden-Harris administration’s decision also comes in response to fears that Intel will be unable to catch up technologically with Asian rival Taiwan Semiconductor Manufacturing Company (TSMC), the NYT reported. It also follows Intel’s selection as the recipient of a $3 billion U.S. military contract.
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Intel’s multi-billion dollar quarterly loss — the largest in its 56-year history — and its subsequent backpedaling of investment in domestic semiconductor production marks a blow to President Joe Biden’s goal of having the U.S. produce roughly 20% of the world’s leading-edge chips by 2030. The White House expected reshoring the semiconductor industry would create 30,000 jobs and $240 billion of investment in the U.S. economy.
The Intel setback comes as a slew of Biden’s Inflation Reduction Act (IRA) and CHIPS Act-funded projects have run into challenges. An August report from the Financial Times found that, of the nearly $228 billion of manufacturing projects worth more than $100 million funded by the two laws, roughly 40% are paused or delayed.
“There will be attrition,” John Hensley, vice-president of markets and policy analysis at American Clean Power, told the FT in August regarding the construction setbacks. “Not every single one of these facilities is going to come online.”
The CHIPS Act and IRA earmarked roughly $53 billion and $1.2 trillion in incentives by 2032, respectively, with President-elect Donald’s Trump’s Treasury Secretary nominee Scott Bessent describing the IRA as “the doomsday machine for the deficit.”
While Biden has tried to use taxpayer-funded subsidies to promote domestic semiconductor manufacturing, Trump has proposed tariffs, arguing the taxes would force chip builders like TSMC to construct plants in the U.S.
Intel and the White House did not immediately respond to the Daily Caller News Foundation’s requests for comment.
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