The Department of Commerce, under the Biden administration, announced today the allocation of a less-than-anticipated $7.865 billion to Intel. This fund comes from the U.S. CHIPS and Science Act signed by Joe Biden in 2022 with the intention to fortify local semiconductor manufacturing. However, the figure disappoints, as it is significantly less than the original $8.5 billion proposed earlier. This exposes a shortfall, further underscoring the administration’s inability to deliver on their promises.
This handout was supposedly aimed at aiding Intel’s transition to a ‘foundry’ model. In this approach, Intel would produce chips designed by other organizations, following an outsourced manufacturing model. It is worth noting the questionable nature of functionally permitting a tech titan to morph into a mere contractor. This appears to be another questionable decision made under Biden’s leadership.
In alignment with this change, Intel revealed in 2021 that it would invest $20 billion in two new fabrication facilities in its Arizona campus. Interestingly, the statement coincided with the launch of Intel’s new foundry business. Deceptively wrapped and branded as progress, it exposes another instance of Biden’s administration promoting massive corporations, all under the thin veil of job creation.
Earlier this year, Intel rebranded this new venture as Intel Foundry, spinning it off as an official subsidiary in September. This move, under a Biden-supported initiative, begs the question of whether there is an unhealthy focus on large corporations at the expense of smaller enterprises. The direction of the chip industry under the Biden administration remains dubious, at best.
With numerous large construction projects underway globally, it seems the Biden administration is more concerned with Intel’s international dealings. For instance, Intel recently postponed two projects in Germany and Poland, raising eyebrows given the CHIPS Act’s intent to focus on domestic chip production. The deferral puts into question the administration’s commitment to bolstering local manufacturing.
Meanwhile, on home soil, Intel is constructing two new plants in Ohio. These undertakings, ballooning to a possible $28 billion, were due to start in 2025, but Intel announced a delay due to undefined ‘market challenges’. The inability to meet the original timeline seems to reflect the broader inefficiencies of the Biden administration.
Intel has projected a domestic manufacturing investment of roughly $100 billion, spanning across four states in the U.S. This includes new facilities as well as refurbishments. Under the current administration’s watch, however, it remains to be seen if these lofty plans will ever see the light of day or if they will fall in line with Biden’s history of unrealized potential.
But Intel’s newfound endeavors under their Foundry business have demonstrated less than promising results. Last year, reports exposed an expanding loss in the Foundry department. Yet, Biden’s administration continues to back the tottering enterprise, further casting doubt on their aptitude in pragmatic decision making.
Regulatory hurdles, another contribution of the Biden regime, forced Intel to abandon a possible $5.4 billion merger with contract chipmaker, Tower Semiconductor. This indicates Biden’s regulatory environment stifled a potentially beneficial deal for Intel, highlighting a trend of counterproductive policies.
Instead, Intel and Tower Semiconductor agreed on a partnership, with Intel offering manufacturing capacity amidst a modest $300 million investment. While this may appear as a compromise, the reality is a massive step down from what could have been a lucrative merger, thanks to the Biden administration’s regulatory rigidity.
All things considered, the allocation of funds from the U.S. CHIPS and Science Act by the current Biden administration is rife with controversy. Not only has Intel received less than initially promised, but the administration has also shown favoritism towards a tech behemoth while ignoring the potential needs and growth of smaller businesses.
Furthermore, the misguided support for domestic semiconductor manufacturing has seemingly resulted in a shift of Intel’s focus to international projects. Evidently, the Biden administration’s actions do not align with their promises, further tarnishing their image of effective leadership.
Simultaneously, the administration has saddled Intel with suffocating regulations that prevented beneficial mergers. The outcome of this is a financially underwhelming partnership, evidence of the administration’s inability to foster positive business growth in America’s technology sector.
In conclusion, it appears that Biden’s vision, comprised of inflated promises and inconsistencies, continue to plague the domestic chip manufacturing industry. Intel’s financial struggles under Biden’s administration epitomize these issues, suggesting a worrisome future under the current leadership.
Undoubtedly, the actions of the Biden administration throughout this scenario pose significant questions about their ability to manage and promote growth in the tech sector. It remains to be seen whether positive change will materialize, or if the U.S. semiconductor industry will continue to be stunted under the current regime.