Intel Scores Massive $8.5B Government Funding to Turbocharge U.S. Chip Fabs

Lily Polanco Follow Mar 20, 2024 · 3 mins read
Intel Scores Massive $8.5B Government Funding to Turbocharge U.S. Chip Fabs
Share this

In a major boost to domestic semiconductor manufacturing, Intel has secured up to $8.5 billion in direct federal funding and an additional $11 billion in loans from the U.S. government. This financial injection, facilitated by the CHIPS and Science Act, aims to fortify America’s chip supply chain and regain leadership in the critical semiconductor industry.

The Department of Commerce announced the non-binding preliminary terms with the Silicon Valley giant, marking one of the largest investments ever announced in U.S. semiconductor manufacturing. The funding will support Intel’s ambitious $100 billion+ investment plan to construct new chip fabrication facilities across Arizona, New Mexico, Ohio, and Oregon over the next five years.

“This announcement is the culmination of years of work by President Biden and bipartisan efforts in Congress to ensure that the leading-edge chips we need to secure our economic and national security are made in the U.S.,” said Commerce Secretary Gina Raimondo.

Reviving American Chip Dominance

The CHIPS Act funding comes at a pivotal time when the U.S. is working to regain its competitive edge in semiconductor manufacturing, which has increasingly shifted to Asia over the past decades. Intel CEO Pat Gelsinger hailed the deal as “a defining moment for the U.S. and Intel as we work to power the next great chapter of American semiconductor manufacturing innovation.”

In addition to the direct federal funding, Intel is expected to claim the Investment Tax Credit of up to 25% on qualified capital expenditures from the Department of the Treasury.

The awarded funds will support several key initiatives:

  • Two new leading-edge logic fabs in Chandler, Arizona, where Intel plans to start production using its Intel 18A process node.
  • Two more leading-edge logic factories in New Albany, Ohio.
  • Modernization of two fabs into advanced packaging facilities in Rio Rancho, New Mexico.
  • Expansion and modernization of Intel’s Hillsboro, Oregon site to include the first High NA EUV lithography equipment for future nodes like Intel 14A.

Expensive EUV Future

The high costs associated with building fabs capable of utilizing extreme ultraviolet (EUV) lithography were a driving factor behind Intel’s recent restructuring into separate foundry and chip design divisions. As Intel CFO David Zinsner explained, “It’s a lot more expensive to build a fab, an EUV fab, than it was to do a pre-EUV fab. And it requires a fair amount of wafer volume to get your return on one of those fabs.”

By opening its fabs to other chipmakers, Intel aims to increase utilization and improve return on investment. Zinsner highlighted the benefits of this model, stating, “In the foundry space, you get a lot of feedback from your customers that helps you make better transistors, but also better transistors at very effective cost.”

Intel’s production roadmap remains ambitious, with the company close to achieving its goal of five process nodes in four years. The Intel 7 (10nm) node is in volume manufacturing, while Intel 4 is nearing completion, and Intel 3 (Sierra Forest) is expected to qualify in the first half of 2024. The 20A and 18A nodes are also progressing well, according to Zinsner.

Cost Optimization Continues

Despite the substantial government funding, Intel remains focused on cost optimization. Zinsner warned of further spending cuts, stating, “We cut $3 billion of spending out last year. We’re going to chip away at trying to drive efficiencies this year. Ultimately, we want to be pulling out another $5 billion to $7 billion of spending efficiencies to help improve the cash flow as well.”

Intel plans to provide more details on its foundry and chip design business segmentation during a webinar in early April.

Written by Lily Polanco Follow
Junior News Writer @