The Administration announced Wednesday that the U.S. Department of Commerce and Intel Corporation (NASDAQ: INTC) have reached a non-binding preliminary memorandum of terms (PMT) to provide up to $8.5 billion in direct funding under the CHIPS and Science Act to strengthen the U.S. supply chain and re-establish American leadership in semiconductor manufacturing.
Over the next five years, Intel expects its investments in the U.S. to exceed $100 billion, as it expands capacity and capabilities in Arizona, New Mexico, Ohio, and Oregon, estimated to create 10,000 manufacturing jobs and nearly 20,000 construction jobs. The Administration’s proposed CHIPS investment, coupled with Intel’s investment, would mark one of the largest investments ever announced in U.S. semiconductor manufacturing, according to the White House.
The PMT also includes approximately $50 million in dedicated funding to develop the company’s semiconductor and construction workforce. This builds upon Intel’s own workforce investments, totaling over $250 million in the past five years, as well as its strong partnerships with local communities, community colleges, universities, Historically Black Colleges and Universities, and apprenticeship programs.
“With this agreement, we are helping to incentivize over $100 billion in investments from Intel – marking one of the largest investments ever in U.S. semiconductor manufacturing, which will create over 30,000 good-paying jobs and ignite the next generation of innovation,” said Commerce Secretary Gina Raimondo.
“The CHIPS for America program will bring semiconductor manufacturing back to the U.S. and create a vital R&D ecosystem to keep it here,” said Under Secretary of Commerce for Standards and Technology and NIST Director Laurie Locascio. “The innovation sparked by this proposed investment would strengthen America’s technological and research leadership and significantly help enhance our nation’s manufacturing capacity while strengthening communities and creating good-paying jobs.”
In addition to the proposed direct funding of up to $8.5 billion, the CHIPS Program Office would make up to $11 billion in loans – which is part of the $75 billion in loan authority provided by the CHIPS and Science Act – available to Intel under the PMT. The company has indicated that it is planning to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25 percent of qualified capital expenditures.
The Commerce Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation and are conditional on the achievement of certain milestones. The awards remain subject to availability of funds. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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