illustration of a semiconductor with text Intel

The Biden Administration Made a Mistake by Lowering Intel’s CHIPS Act Award

The Biden Administration made a mistake by lowering Intel’s CHIPS Act award. A big mistake. Huge.

The U.S. government is scaling down Intel’s proposed $8.5 billion federal chips grant to less than $8 billion, partly due to a $3.5 billion contract Intel secured to produce chips for the Pentagon, reports the New York Times. The company will still have more money from the government than any other chipmaker funded under the CHIPS and Science Act. Still, Intel’s recent woes made the U.S. government worry about the company.

Earlier in the year, the Biden administration committed nearly $20 billion in grants and loans to Intel to help it expand its manufacturing operations in the U.S. The preliminary funding included $8.5 billion in grants and up to $11 billion in loan guarantees to help construct new production facilities in Arizona, New Mexico, Ohio, and Oregon. Also, the company got $3.5 billion from the U.S. Department of Defense to build chips for government, military, and secret service agencies in America.

https://www.tomshardware.com/tech-industry/us-plans-to-shrink-intels-usd8-5b-chips-funding-to-below-usd8b-restructuring-takes-into-account-chipmakers-usd3-5b-contract-to-make-chips-for-the-military

I wish I could swear as much as I’d like to. But I can’t. So The Biden Administration’s rationale is partly that because Intel got some money to make military chips, they don’t deserve all the money they were promised to make consumer chips. The other part is that Intel isn’t in good health so it should get less cash… instead of more? Because that makes sense?

The stupidity of this is shocking.

Intel is the largest semiconductor manufacturer in the United States and has invested some $30 billion in domestic activities. $8.5 billion doesn’t even pay for a fab anymore and yet the government thinks it’s too much? Intel is too big to fail.

illustration of semiconductors falling from the sky

Their stated goals are to bring back semiconductor manufacturing and research to the United States. Well to do that semiconductor researchers and manufacturers need US Government support just like how semiconductor manufacturers and researchers in other countries get government support. That’s the entire idea of the CHIPS Act.

And yet here we are, taking cash away from what is in essence America’s semiconductor champion. Intel needs every dollar it can get to survive. The awards for Intel’s consumer and military activities were separate and shouldn’t effect each other. It’s like some teen’s teacher going “well you got an A in math, so I’m just going to reduce you to a C in English so you don’t do too well”. And to top it off that military money isn’t just profit Intel gets to stash away. Intel has investment requirements for that money… for CHIPS Act money as well.

It’s pathetic. It’s shortsighted. It’s exactly the opposite of the entire idea of the CHIPS Act. I’m beyond disappointed in the Biden Administration’s decision to take cash away from Intel. Every dollar matters. Intel needs MORE cash to meet its investment requirements not less.

And while I’m sure Intel’s Gelsinger will be happy with whatever he can get at this point… he shouldn’t be in this position.

Now I’m rooting for a Republican Congress to come through with a CHIPS Act II and an electronics act to boot. Intel is too big to fail and the Biden Administration is wrong to do this. The United States needs to invest dramatically in the domestic semiconductor ecosystem and in electronics manufacturing capacity.

The United States cannot continue to be dependent on China for electronics and Taiwan for chips. We need to wake up.