Intel and U.S. ink funding contract — $7.86 billion under the CHIPS Act, $3 billion from Pentagon

Intel and the U.S. government on Tuesday officially inked funding deal. Intel will get up to $7.86 billion in funding from the U.S. Department of Commerce under the CHIPS and Science Act as well as get a $3 billion contract under the Secure Enclave program from the Department of Defense. The company is also eligible for loan guarantees and a 25% investment tax credits of qualified investment of $100 billion.

The $7.86 billion CHIPS Act funding will be used to support Intel’s semiconductor manufacturing and advanced packaging projects in Arizona (where Intel’s most advanced Fab 52 and Fab 62 are located), New Mexico (where Intel’s most advanced packaging facilities are), Ohio (home for Intel’s future fabs), and Oregon (the company’s major hub for semiconductor R&D). These projects are central to Intel’s plan to build and package chips using leading-edge process technologies in the U.S.

“With Intel 3 already in high-volume production and Intel 18A set to follow next year, leading-edge semiconductors are once again being made on American soil,” said Pat Gelsinger, CEO of Intel. “Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country’s long-term economic growth and national security. Intel is deeply committed to advancing these shared priorities as we further expand our U.S. operations over the next several years.” 

Intel was supposed to get up to $8.5 billion in direct funding from the U.S. government, but after it implemented significant changes to its plans (e.g., postponed building its Ohio campus by several years) and said that demand for its products could be lower than expected in the coming years, the U.S. government also decided to lower its funding to Intel by over $600 million. 

In addition to $7.86 billion from the U.S. Department of Commerce, Intel is also set to get $3 billion from the U.S. Department of Defense to make chips for the U.S. government, intelligence and military agencies under the Secure Enclave program. The program aims to manufacture advanced chips for aerospace and other sensitive applications in secure, isolated facilities. Given the high cost of building separate cleanrooms for military-grade chips makes this approach impractical, Intel has adopted alternative methods to meet security standards. The program spans multiple states and includes Intel’s Arizona site, home to the 18A-capable Fab 52 and Fab 62. 

Intel’s investments in its new project will create over 10,000 jobs directly within the company, nearly 20,000 construction jobs, and over 50,000 roles in supplier and supporting industries. In addition to manufacturing, Intel is focused on workforce development, allocating $65 million to train future talent. This includes $56 million for education and training programs, $5 million for childcare near its facilities, and $4 million to promote diversity in construction. 

“The CHIPS for America program will supercharge American innovation and technology and make our country more secure — and Intel is playing an important role in the revitalization of the U.S. semiconductor industry through its unprecedented investments across Arizona, New Mexico, Ohio, and Oregon,” said U.S. Secretary of Commerce Gina Raimondo. “Thanks to the leadership of President Biden and Vice President Harris, our CHIPS award is enabling Intel to drive one of the most significant semiconductor manufacturing expansions in U.S. history.”