Intel Could Receive Their Chip Subsidy As Early As Next Week, But Only Because Of Politics?

U.S. chip subsidies are finally expected to take a crucial step forward.

According to two sources familiar with the matter, President Biden and Commerce Secretary Raimondo are set to announce billions of dollars in incentives to Intel at its Arizona factory next week to expand its chip production in the US.

Meanwhile, Intel is reportedly inviting its customers and suppliers to witness the official announcement of the subsidy but has kept mum about specific plans.

Insiders also revealed that Samsung Electronics and TSMC are expected to receive federal subsidies from the U.S. government in the coming weeks.

The Chip Act passed in 2022 aimed to boost domestic semiconductor production in the U.S. through subsidies, including $39 billion for production and $11 billion for R&D rewards.

Last month, the Biden administration announced the allocation of $1.5 billion to GlobalFoundries, the world's third-largest chip contract manufacturer, to build a new production facility in Malta, New York, and expand existing production lines in Vermont.

Previously, the U.S. Department of Commerce announced a $162 million government subsidy to Microchip to help double the capacity of its two U.S. factories in mature semiconductor chips and microcontroller unit production.

Intel is hoping for a larger subsidy from the U.S. government. Last month, insiders revealed that the White House is negotiating over $10 billion in subsidies to Intel, which, if granted, would be the largest since the Chip Act passed.

However, it seems unlikely that the U.S. government will subsidize Intel with more than $10 billion. On Wednesday, another insider also mentioned that the U.S. Department of Defense had canceled its promised $2.5 billion subsidy to Intel a few days before the deadline, which could affect the total grant amount.

Nevertheless, subsidies to major chip manufacturers like Intel are imperative, and the sooner, the better.

According to analysts, Intel and TSMC's declared investment sites of Arizona and Ohio are currently key political swing states in the US elections. The Biden administration hopes that large-scale investment programs will enhance its reputation and defeat Trump, who is representing the Republican Party in the election.

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