Intel is likely to be the largest beneficiary of the CHIP Act
During the 2021 global live event themed “Intel Ignition: Engineering the Future,” Intel’s CEO Pat Gelsinger announced the deployment of the “IDM 2.0” strategy. This stratagem comprises three key components: a global network of internal factories geared towards mass production, an expansion in the use of third-party foundry capacity, and the establishment of a premier Intel Foundry Services (IFS).
Since that announcement, Intel has been ambitiously expanding its production capacity. One of the reasons for Intel’s bold investments is the subsidies obtained from local governments, such as benefits from the “CHIP Act” and various Department of Defense projects in the United States. Media reports suggest that Intel is likely to be the largest beneficiary of the CHIP Act.
At present, Intel has four new semiconductor fabrication plant projects underway in the United States. The Fab 52 and Fab 62 in Arizona are set to manufacture chips using the Intel 20A process, anticipated to be operational by 2024. Meanwhile, two other fabs located in Ohio, utilizing the Intel 18A/20A process, are planned to commence mass production by 2025. These ambitious projects will require an investment of at least $100 billion, hence Intel’s reliance on governmental support is not surprising.
In addition, Intel is negotiating with the government on a so-called “secure enclave” project to reduce dependency on overseas chip manufacturing, particularly concerning national defense chips. Reports indicate that this project’s fab may receive separate funding, estimated between $3 and $4 billion. How the subsidies from the CHIP Act will be allocated remains unconfirmed, yet rumors suggest that the expenditures for the “secure enclave” project may come from the $39 billion allocated for manufacturing within the act. This implies that the project could command over 10% of these funds, making Intel a significant beneficiary of the policy.
It is understood that the defense sector’s orders constitute only about 2% of the entire chip market share, with specific process requirements that are unnecessary for other clients, in addition to heightened security risks—factors that drive manufacturing costs substantially higher. Sources reveal that due to Intel’s probable exclusive acquisition of the “secure enclave” project, with funding sourced from the CHIP Act, could potentially limit the scale of subsidies available for other projects.