U.S. Finalizes $7.86 Billion Subsidy for Intel to Boost Domestic Semiconductor Production

The U.S. Commerce Department is finalizing a $7.86 billion government subsidy for Intel, down from the original $8.5 billion announced earlier this year. This reduction follows Intel receiving a separate $3 billion award from the Pentagon in September, funded from the $39 billion allocated for U.S. semiconductor production. The grant will help support $90 billion in manufacturing projects across states like Arizona, New Mexico, Ohio, and Oregon. Commerce Secretary Gina Raimondo emphasized that the funding will enable American-designed chips to be manufactured by U.S. workers, marking a significant step in restoring domestic semiconductor production.

Intel has already met some project milestones and is set to receive at least $1 billion of the award before December. Despite some financial struggles, including layoffs and narrowing margins, the chipmaker’s commitment to domestic manufacturing remains strong. The $7.86 billion subsidy is the largest under the 2022 CHIPS Act, which aims to boost semiconductor output in the U.S. and ensure the country’s long-term economic growth and national security.

Intel also decided not to finalize a separate $11 billion government loan, citing unfavorable terms for shareholders. The company plans to explore future loan provisions under different terms, aligning with its long-term market interests. Additionally, Intel intends to claim the Treasury Investment Tax Credit, which could cover up to 25% of qualified investments over $100 billion.

The grant comes with certain conditions, including restrictions on stock buybacks for five years and provisions for sharing excess profits. Raimondo mentioned that the Intel award is the sixth to be finalized and more will follow in the coming weeks, with a focus on safeguarding taxpayer dollars.