The Biden-Harris government is pulling back promised investments under the CHIPS and Science Act due to canceled projects by major technology companies, like Intel, following significant market losses. Intel is seeing the deepest cuts as it was the top beneficiary of the legislation, qualifying for $8.5 billion in grants and up to $11 billion in subsidized loans. In total, CHIPS set aside a total appropriation of $39 billion to revive America’s flagging semiconductor industry and curtail the reliance on China for the critical tech component.
However, the Biden-Harris government is announcing it is slashing Intel’s subsidy to just $8 billion in total after the company determined it would have to delay investment in several planned facilities. The company posted a $16.6 billion quarterly loss in October, setting off an investor panic.
Increasingly, the Biden-Harris government has come to believe that Intel will not be able to catch up to, let alone overtake, the Taiwan Semiconductor Manufacturing Company (TSMC). Concerns over TSMC and Taiwan’s long-term independence from the People’s Republic of China are a primary driver behind the push in the U.S. for a revamped and revitalized domestic semiconductor industry.
Biden initially promised that the CHIPS legislation would result in the U.S. taking over 20 percent or more of the global semiconductor market by 2030. However, that estimate now appears to have been far too presumptive.
In addition, the take of domestic semiconductors was expected to generate $240 billion of investment in the U.S. economy and over 30,000 new jobs—both numbers now likely need revising.
