The US government set to announce over $10 billion in subsidies for chip makers

The Biden administration is set to unveil a substantial government subsidy aimed at supporting Intel's expansion of its US fabrication facilities, possibly as early as next week.

Sources familiar with the matter indicate that President Joe Biden and Commerce Secretary Gina Raimondo will disclose a multi-billion dollar funding package during an event at Intel's Arizona campus in Chandler.

Intel's CEO, Pat Gelsinger, announced the company's intention to open its chip plants for contract manufacturing almost three years ago. Since then, Intel has announced four factories, two in Arizona and two in Ohio, with a combined value of $50 billion.

At a foundry event late last month, Gelsinger also revealed his ambitious plan to make Intel the second-largest supplier of silicon behind TSMC by 2030.

The commitment by Intel aligns well with the goals of the CHIPS and Science Act, which was signed into law in 2022 to reduce America's reliance on semiconductor manufacturing in the Asia-Pacific region.

Up to this point, the US Commerce Department has only awarded a fraction of the available funds – $35 million for BAE,  $162 million for Microchip, and, $1.5 billion for GlobalFoundries. However, Intel along with TSMC and Samsung, are expected to secure a significant portion of the CHIPS funds.

Reports suggest that Intel could potentially receive over $10 billion in CHIPS funds, although it’s not clear if this will also cover the establishment of a  "secure domain" for the production of military silicon.

Previously, the Pentagon had pledged to fund $2.5 billion of the military silicon project, but recent developments indicate that it has withdrawn its commitment. This leaves the Commerce Department to cover the costs.

Samsung and TSMC, the other two top players in advanced semiconductor manufacturing, are also expected to receive CHIPS awards in the near future.

Samsung could potentially receive up to $6 billion, while TSMC may receive $5 billion in subsidies. Both companies have made substantial investments in US semiconductor capacity, with TSMC announcing plans for a fab in Arizona in 2020 and Samsung committing to a $17 billion plant in Texas.