US semiconductor maker Intel can count on $8.5 billion in subsidies and $11 billion in discounted government loans for its US expansion plans. In addition, tax relief of 25 percent of investments of 100 billion dollars is planned. According to the White House, President Joe Biden wanted to announce the details of the preliminary agreement on Wednesday in Arizona.
The state aid will support the construction and expansion of Intel factories in Arizona, Ohio, New Mexico and Oregon. It is said to create almost 30,000 jobs and support tens of thousands in the supply sector.
The subsidy is made possible by the Chip and Science Act, which, with bipartisan support, underlines America’s ambition to produce about 20 percent of all technically sophisticated microchips by the end of this decade. Although the United States invented microchips, it produces only ten percent of the world’s production and does not currently produce the latest generation of microchips, it said. According to the White House, as a result of state subsidies, a total of 240 billion dollars of private investments were mobilized for the production of chips in the USA.
Intel’s financial assistance is the largest yet. Intel’s knack for getting subsidies is also evident in Germany, where the company received ten billion euros to set up production in Magdeburg.
Fast commit to TSMC
Taiwanese manufacturer and world leader in high-tech semiconductors, Taiwan Semiconductor Manufacturing Company (TSMC), is also set to receive a $5 billion subsidy from Washington for two of its manufacturing facilities in Arizona, which are already under construction, according to media reports. Congress allocated a total of $39 billion in subsidies for semiconductor manufacturing and another $75 billion in loans. In addition to Intel and TSMC, Samsung and Micron are in the running for billions in bailouts.
A significant part of the subsidies goes to the “battlefield” states, where sometimes the Democrats get a majority in the elections, and sometimes the Republicans. Ohio is a special case because Republicans have won all but one primary there. Left-wing populist Democrat Senator Sherrod Brown has so far managed to fend off his Republican opponents and win re-election in November. The White House said Intel’s private investment, backed by subsidies, is the largest in Ohio’s history.
Construction of some semiconductor manufacturing facilities in America has been significantly delayed. Producers cite difficulties in recruiting skilled personnel, bureaucratic obstacles and changed financing conditions as reasons.