PORTLAND, Oregon — This story is courtesy of the Portland Business Journal, a KGW news partner.
Intel still has a lot to worry about, but it can cross concerns about its big federal CHIPS Act award off the list.
The company is set to receive $7.86 billion from the program, the Biden administration announced on Tuesday.
That's less than the $8.5 billion outlined in a preliminary announcement in March, but the final contract ends uncertainty fueled by Intel's finance and sales struggles this year.
A senior administration official said the 7.5% downsizing solely reflected that Intel in September was awarded $3 billion from the CHIPS Act to support production for the Defense Department in a program called "Secure Enclave."
Intel's piece of $39 billion in chip manufacturing subsidies is recognition that the company, diminished and hobbled though it may be, remains indispensable as a U.S.-headquartered leading-edge chip technology company.
Almost $11 billion total
"Intel is now receiving almost $11 billion of CHIPS funding," a senior administration official said in a call with reporters. "So, obviously, a very, very significant measure of government support focused on our belief that Intel is obviously a core component of this program and the success of the U.S. semiconductor ecosystem."
Intel will need to hit incremental milestones to receive all the money, but it has already made enough progress to get "at least $1 billion" before the end of the year, the official said.
"The award is executed," the administration official added. "The funds are obligated ... so there is now a contractual commitment of the United States government to provide the funds" as long as Intel holds up its aspects of the agreement.
The CHIPS Act award is tied directly to $90 billion that Intel plans to invest in Oregon, Arizona, Ohio and New Mexico before the end of the decade, the administration said (the investment is expected to rise to $100 billion beyond 2030). A federal investment tax credit could save Intel as much as a quarter of its investment.
Intel says it will spend $36 billion to upgrade its Oregon facilities, the Silicon Valley-based company's biggest single worksite with some 23,000 employees at the start of this year, and home to its research and development efforts.
The administration official called Intel's Oregon's operations "a true national asset," noting that they recently became home to the most advanced chipmaking equipment in the world.
Nearly $1.9 billion for Oregon
The administration broke the nearly $7.9 billion CHIPS Act award down to about $1.9 billion for Intel projects in Oregon, $3.9 billion in Arizona, $1.5 billion in Ohio and $500 million in New Mexico.
In a written statement, Intel CEO Pat Gelsinger referenced advances that are intended to recapture Intel's lost technology leadership, a cornerstone of the company's revival strategy.
"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,” Gelsinger said.
Still, even with the federal support Intel faces deep challenges in bringing to fruition the turnaround the Gelsinger began in 2021. Whether it can do so under its current structure remains a debated question.
Intel's new tech needs to succeed, no sure thing. And the company needs to convince chip designers to take advantage of the manufacturing capacity it is building in Arizona and Ohio.
The company also must stem market share declines for its own products and find a way to gain better footing in the booming AI chip market where it is largely absent.
Intel's struggles, including an unprecedented string of money-losing quarters, have taken a massive toll on its value, with its shares down 50.5% this year amid a booming stock market. Workers have felt the sting of cost-cutting, with 1,300 in Oregon getting layoff notices and an untold number encouraged to leave through early retirement.
