Giving Intel $20 Billion Exposes American Weakness

Intel Inc. is receiving $20 billion in grants and loans to help finance the expansion of its production capacity in the US, becoming the largest beneficiary by far of the 2022 Chips and Science Act, the cornerstone of President Joe Biden’s plan to reverse a decades-long decline in the US’s share of global semiconductor output.

The White House is already trotting out this award on the campaign trail as proof that its policies are working for America, but the reality is that the conditions attached to it just underscores the country’s competitive disadvantages. And while global demand for chips is trending sharply higher, primarily due to breakthroughs in artificial intelligence, the US has neither the workforce capability nor the regulatory regime to keep up. Chipmakers are on course to add about 115,000 jobs by 2030, the Semiconductor Industry Association said in July, citing a survey it commissioned, but based on current degree completion rates, about 58% of those projected positions may go unfilled. Even Commerce Secretary Gina Raimondo warned in December that US efforts to build out the domestic semiconductor industry could be delayed by years because of the standard environmental reviews.

Past Glory Days

To qualify for the grants associated with the Chips Act, recipients must not only expand production capacity in the US but do so in a way that advances the Biden administration's larger agenda, from increasing the representation of marginalized workers in the tech industry to coordinating with organized labor on their workforce development plans. Such goals may be worthwhile, but they increase manufacturing costs and make expanding production risky. In the case of Intel, the Santa Clara-based company won’t get all of the funding right away, according to Bloomberg News. The money may take years to be disbursed and will be contingent upon Intel meeting production goals and other benchmarks. It’s telling that Intel’s shares are little changed since mid-February, when it was revealed that the company was in talks for the funds even as the broader equity markets have soared.