The White House gives Intel $8.5 billion in funding for the CHIPS Act

The White House announced on Wednesday that it will provide Intel with $8.5 billion in funding Through the CHIPS Act. Intel (INTC) says the infusion of cash will fund sites in locations including the massive complex the company is building in Ohio, its factories in Arizona and New Mexico, and its research and development facility in Oregon.

The $52.7 billion CHIP Act aims to bring semiconductor manufacturing back to the United States, reducing the country's dependence on other nations for the processors that power everything from smartphones and laptops to military infrastructure and equipment.

“Today is a defining moment for the United States and Intel, as we power the next great chapter of American semiconductor innovation,” Intel CEO Pat Gelsinger said in a statement.

“AI is powering the digital revolution and everything digital needs semiconductors. Supporting the CHIPS Act will help ensure Intel and the United States remain at the forefront of the AI ​​era as we build a resilient and sustainable semiconductor supply chain to support our nation’s future.”

President Biden signed the CHIPS Act into law in August 2022, allocating $39 billion for manufacturing incentives. But the distribution of funds was slow.

Intel CEO Pat Gelsinger participates in a panel discussion at the World Economic Forum Annual Meeting in Davos, Switzerland, Wednesday, January 17, 2024. The World Economic Forum Annual Meeting is held in Davos from January 1 to January 17.  15 to 19 January 2024. (AP Photo/Marcus Schreiber)

Intel CEO Pat Gelsinger participates in a panel discussion at the World Economic Forum's annual meeting in Davos, Switzerland. (AP Photo/Markus Schreiber) (News agency)

The funding announcement is just coming One day after the Nikkei Asia report Major suppliers of semiconductor chemicals to Intel and TSMC's plans to build factories in Arizona are slowing construction of their own facilities due to higher-than-expected costs and a shortage of available workers.

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Last month, The Wall Street Journal reported Intel is delaying the opening of its Ohio factory from 2025 until sometime between 2027 and 2028, due to slow chip sales. TSMC, the world's largest semiconductor manufacturer, also delayed the expected completion date of its own facility in Arizona, with the factory now scheduled to start building chips between 2027 and 2028.

The CHIPS Act funding comes at a critical time for Intel. The company is going through a major transformation as it seeks to reclaim its position as the world's most advanced semiconductor manufacturer from TSMC.

Part of that includes the company's so-called “five decades in four years” plan. Think of a node as a generation of chips. As you move from one node to another, you are supposedly taking a step forward in processing capabilities.

Gelsinger announced its “five-node” plan in 2021, and so far, the company is on track to achieve it by next year with the rollout of Node 18A. Intel says this is the chip that will put it back on top. The next generation of chips, Node 14A, was also announced.

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It's not just about processing nodes. Intel is also building out its foundry services business, which will allow it to manufacture semiconductors for third-party customers on a contractual basis similar to TSMC's business model.

In February, Intel announced that Microsoft Corporation (MSFT) would become one of its foundry customers, where chips will be built on Intel's 18A node.

Despite these victories, Intel is struggling in the generative AI market, which is dominated by NVDA. This company's CEO Jensen Huang on Monday announced the next generation of artificial intelligence chips from Nvidia as part of the annual GTC conference.

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Nvidia shares have jumped about 247% over the past 12 months thanks to the ongoing artificial intelligence boom. Meanwhile, Intel shares rose 41%. AMD (AMD), which designs both GPUs and CPUs, rose 85%.

Daniel Holley He is the technology editor at Yahoo Finance. He's been covering the tech industry since 2011. You can follow him on Twitter @Daniel Holly.

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