With Intel being far-and-away the greatest beneficiary of the loot we will see how they intend to use it.
They've gotten off to a rough start. The Administration's March announcement of the $8.5 billion in grants and $11 billion in loans said the money would create 30,000 direct and indirect jobs.
On August 1st the company released financials that shocked the market with the exposure of just how deep the rot at the former crown jewel of American tech extended. As part of the press release the company announced they would be firing a minimum 15,000 of their current employees. More after the jump but next up is Bloomberg via Yahoo Finance, August 9:
The Biden administration is nearly finished divvying up $39 billion in grants under the Chips and Science Act, the landmark bipartisan legislation aimed at revitalizing the domestic semiconductor industry. The bigger test still lies ahead.
The Chips Act, enacted two years ago Friday, is the nation’s most audacious foray into industrial policy since World War II. It’s essentially a bet that four companies — Intel Corp., Micron Technology Inc., Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. — can bring sophisticated chip production back to the US. In a sign of the ambition, one explicit goal is making a fifth of the world’s most advanced processors by 2030, up from roughly zero today.
The US is in many ways on track, but it’s been no simple task. Hundreds of firms spent months haggling over the money. Even US officials themselves have disagreed over which parts of the chip economy need the most help. They opted to give the biggest preliminary award to Intel — which Commerce Secretary Gina Raimondo has called “an American champion” — only to see the Silicon Valley pioneer disclose profound business problems earlier this month. It plans to slash more than 15,000 jobs as sales decline, and Intel’s stock is trading near its lowest level in more than a decade.
Yet Intel, while crucial, isn’t everything. The more fundamental question is whether the US can sustain momentum across the broader undertaking. Industry leaders have always cautioned that $39 billion isn’t actually that much. Companies will need to find more than 160,000 workers. And the country is heading toward a presidential election that only adds uncertainty.
At the center of it all is Mike Schmidt, who runs the Commerce Department’s 175-person Chips Program Office, or CPO. His team — formed with talent from Washington, Wall Street and Silicon Valley — has one primary task: reducing reliance on Asia, and particularly Taiwan, for the tiny electronic components that power everything from microwaves to missiles.
Both American and foreign companies are now “investing at major scale in semiconductor manufacturing in the United States,” he said in an interview, and that alone is a tremendous milestone. “If you could go back two years and tell us that we’d be where we are now, I would take it 100 times out of 100.”
A top priority is securing at least two large manufacturing clusters for leading-edge logic chips, or the brains of devices. Officials also want high-volume sites for advanced packaging, the process of encasing chips and connecting them to other hardware. And they’re seeking increased production of less advanced semiconductors known as legacy chips, an area where the US worries about China’s growing capacity, as well as cutting-edge DRAM memory, which handles data storage and is essential to the AI boom.
On all fronts, there’s progress. In the past several years, nearly a hundred companies have pledged to spend roughly $400 billion on US facilities. Over half of that comes from a trio of top chipmakers — TSMC, Intel and Samsung — that are planning a slew of new chip fabrication centers, or fabs, to manufacture their most cutting-edge technology.
But most of those semiconductors will pass through Asia. CPO couldn’t persuade TSMC to bring packaging capacity to its site in Arizona, according to people familiar with the conversations. And though a supplier is building nearby, many chips will be shipped overseas for a key step of the process. That’s true for much of the US semiconductor ecosystem — a dynamic that a senior Commerce official warned “creates supply chain and national security risks that we just can’t accept.” (TSMC and CPO declined to comment on their talks.)
Asked what share of US-made chips could be packaged here based on current plans, Schmidt didn’t offer a specific number. “The supply chains will continue to be global,” he said, adding that the US has made a “strong foothold.” CPO has funded five packaging-related projects so far, one of which will focus on chips sent here from South Korea.
The Biden administration also has struggled with how to promote memory chips, a commoditized product that carries low profit margins — meaning that scale matters for commercial viability. Samsung floated the idea of building a Texas memory fab, people familiar with the matter said, as part of a broader investment pitch that would have been more than double its current commitment. CPO decided against funding it. (Samsung and CPO declined to comment. Most of the dozens of people interviewed for this story requested anonymity to discuss sensitive conversations.)....
....MUCH MORE, a first rate piece of reporting.
Our most recent post on INTC, yesterday's link to Barron's looked at valuation: ""Intel Stock May Have Bottomed at Tangible Book Value" (INTC)".
Some of the posts since the CHIPS announcement:
- Intel CEO Says Nvidia’s Jensen Huang Is Wrong About a Basic Concept of Semiconductors (INTC; NVDA)
- "Intel stock plunges as company announces cost-cutting plan to slash jobs, suspend dividend" (INTC)
- My Little Crony: Intel, The Buyback Scam And $19.5 Billion From The Chips Act (INTC)
- "Intel shareholders sue chipmaker after job, dividend cuts cause stock plunge" (INTC)
- Arizona independents in play as Biden pushes big Intel investments ...
- Intel Postpones September Innovation Event Until 2025 (INTC)
