U.S. Awards Intel $3 Billion for Military Supply Program

Politics|U.S. Awards Intel $3 Billion for Military Supply Program

The Biden administration announced on Monday that it would award Intel up to $3 billion to expand the company’s manufacturing of advanced semiconductors for the U.S. military.

The program, called Secure Enclave, aims to create a trusted source of computer chips for the U.S. government. It will be funded out of a pool of money from the 2022 bipartisan CHIPS Act, which lawmakers passed in an attempt to reduce the nation’s dependence on foreign sources of semiconductors.

Much of the world’s semiconductors are currently made in Asia, particularly Taiwan. China claims the island as its own territory, a position that Taiwan rejects, and American officials have long had concerns about the consequences for the U.S. economy and military if China were to invade Taiwan.

Intel officials said on Monday that the company would help “secure the domestic chip supply chain” and work with federal officials to “enhance the resilience of U.S. technological systems.”

The announcement comes about six months after the Biden administration awarded Intel a grant of up to $8.5 billion to help the company fund major construction projects in Arizona, Ohio, New Mexico and Oregon. That money, along with the award announced Monday, stems from a $39 billion pot of CHIPS Act funding intended to encourage companies to build and expand semiconductor plants across the United States.

Federal officials also awarded Intel up to $11 billion in loans, and the company is expected to claim federal tax credits that could cover 25 percent of its U.S. expansion projects, which are expected to cost more than $100 billion over five years.

Commerce Secretary Gina Raimondo, whose department is overseeing the distribution of the grants, said the $8.5 billion award would help bolster America’s production of the most advanced semiconductors. She also said Intel’s award would be the single largest grant made to a manufacturer under the new program. Commerce Department officials have announced more than $30 billion in subsidies so far.

Concerns about Intel’s financial viability have ramped up in recent weeks, however. In August, the chipmaker announced that it would slash more than 15,000 jobs, or about 15 percent of its work force. The company — which is the only American company that both designs and manufactures leading-edge logic chips, the tiny brains of computers and other electronic devices — also announced other restructuring moves and a reduction in capital spending.

The $3 billion award will be executed by the Defense Department, though the money will come from the Commerce Department’s funding.