The White House on Wednesday announced it will provide Intel with $8.5 billion in funding through the CHIPS Act. The infusion of cash, Intel (INTC) says, will fund sites at locations including the massive complex the company is building in Ohio, plants in Arizona and New Mexico, and its research and development facility in Oregon.
The $52.7 billion CHIPS Act aims to bring semiconductor manufacturing back to the US, reducing the nation's dependence on other countries for the processors that power everything from smartphones and laptops to infrastructure and military equipment.
“Today is a defining moment for the US and Intel as we work to power the next great chapter of American semiconductor innovation,” Intel CEO Pat Gelsinger said in a statement.
“AI is supercharging the digital revolution and everything digital needs semiconductors. CHIPS Act support will help to ensure that Intel and the U.S. stay at the forefront of the AI era as we build a resilient and sustainable semiconductor supply chain to power our nation’s future.”
President Biden signed the CHIPS Act into law in August 2022, setting aside $39 billion for manufacturing incentives. But the rollout of the cash has been slow going.
The funding announcement comes just one day after Nikkei Asia reported that key semiconductor chemical suppliers for Intel and TSMC’s plans to build plants in Arizona are slowing construction of their own facilities due to higher-than-expected costs and a lack of available workers.
Last month, The Wall Street Journal reported that Intel is delaying the opening of its Ohio plant from 2025 until sometime between 2027 and 2028 due to slow chip sales. TSMC, the world’s largest semiconductor manufacturer, has also delayed the projected completion date of its own facility in Arizona, with the plant now set to begin building chips between 2027 and 2028.
The CHIPS Act funding comes at a crucial time for Intel. The company is in the midst of a major turnaround as it seeks to regain its positioning as the world’s most advanced semiconductor manufacturer from TSMC.
Part of that includes the company’s so-called “five nodes in four years” plan. Think of a node as a generation of chips. As you go from one node to another, you’re presumably taking a step forward in processing capabilities.
Gelsinger announced the "five nodes" plan in 2021, and so far, the company is on track to deliver on it by next year with the introduction of its 18A node. Intel says that’s the chip that will put it back on top. It also announced the next generation of chips, the 14A node.
It’s not just processing nodes, though. Intel is also building out its foundry services business, which will allow it to manufacture semiconductors for third-party customers on a contract basis, similar to TSMC’s business model.
In February, Intel announced that Microsoft (MSFT) will become one of its foundry customers, with chips set to be built on Intel’s 18A node.
Despite those wins, Intel is struggling in the generative AI market, which is dominated by Nvidia (NVDA). On Monday, that company’s CEO, Jensen Huang, announced Nvidia’s next generation of AI chips as part of its annual GTC conference.
Shares of Nvidia have jumped some 247% over the last 12 months thanks to the ongoing AI boom. Shares of Intel, meanwhile, are up 41%. AMD (AMD), which designs both GPUs and CPUs, is up 85%.
Daniel Howley is the tech editor at Yahoo Finance. He's been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.
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