The United States will give Intel $7.9 billion in federal grants to boost the chip industry

The Biden administration has finalized a deal to give Intel Corp nearly $7.9 billion in federal grants, the largest direct subsidy in a plan to boost domestic chip manufacturing.

The deal for troubled Intel Corp. is smaller than an earlier proposal, meaning the company can start receiving money as its projects in four U.S. states meet agreed benchmarks. A senior government official said that based on the milestones Intel has already reached, the company will be eligible for at least $1 billion this year.

Specifically, Intel projects in Arizona, Oregon and New Mexico will receive funding, Bloomberg reported, citing people familiar with the matter who requested anonymity because the details were not public. The company's undeveloped project in Ohio, which has been delayed for years, has not yet qualified for federal support but has already received $2 billion from the state, people familiar with the matter said.

Us Commerce Secretary Gina Raimondo said the Intel grant would allow "for the first time in a long time, American-designed chips to be made and packaged in America by American workers at an American company". Raymondo heads the Commerce Department, which is responsible for implementing the Chip and Science Act of 2022. The signature bipartisan bill includes $39 billion in grants, $75 billion in loans and loan guarantees, and a 25 percent tax break to revive the U.S. chip manufacturing industry.

Under the original plan, Intel would have received $8.5 billion in Chip Act grants and $11 billion in loans. Senior officials said the size of the grant was reduced in the final agreement, and Intel chose not to make the loan, but did not elaborate on the reasons.

The official said the reduction was not due to business challenges facing Intel. The administration official and others briefed on the discussions said that was because Intel had received an additional $3 billion in grants to produce advanced chips for the military.