The U.S. Dept. of Commerce and Intel have reached preliminary terms for the government to supply the company with $8.5 billion in direct funding to support projects building or modernizing semiconductor chip plants, officials announced March 20.

The funding announcement marks “the single-largest grant” that will be made from CHIPS and Science Act, U.S. Commerce Secretary Gina Raimondo said during an event announcing the funding at Intel’s Ocotillo Campus in Chandler, Ariz. The law, passed in 2022, set $52 billion to boost the U.S. semiconductor manufacturing sector, including $39 billion for construction

“This investment will enable Intel to produce the most sophisticated chips in the world that will power our economic and national security, power advanced technology, including artificial intelligence, the defining technology of our time,” Raimondo said.

The money would support Intel projects in Arizona, New Mexico, Ohio and Oregon, which the company says it expects to cost more than $100 billion combined and support close to 20,000 construction jobs.

In addition to the direct funding, the non-binding preliminary memorandum of terms between Intel and the government would make up to $11 billion in loans available to Intel. The company says it also expects to claim a U.S. Dept. of Treasury investment tax credit covering up to 25% of certain capital costs. 

“We are building a future with geographically balanced and resilient supply chains,” Intel CEO Pat Gelsinger said at the Arizona event.

The projects are in varying stages of progress. In Arizona, Intel is nearing completion of two new chip fabrication plants, or “fabs,” as part of a project led by general contractor Hoffman Construction Co. at the Chandler site where officials gathered to announce the funding. The company is also planning to modernize one ab existing fab at the site. 

Intel also announced the reopening of a refitted fab in Rio Rancho, N.M., in January, and says it plans to upgrade two other fabs there. Intel is also planning to expand and modernize its semiconductor chip development facilities in Hillsboro, Ore. 

In Ohio, Intel is building two fabs in Licking County, outside Columbus, with general contractor Bechtel. The first fab is scheduled to begin operating within the next few years. The company has also said it could build additional fabs there in the future, although it did not highlight those as projects supported by the federal funding. Raimondo said last month that officials are prioritizing projects that will be online by 2030 for CHIPS Act money.

Intel is the fourth company selected under the CHIPS Act program. Last month, Commerce Dept. officials said they had reached preliminary terms with GlobalFoundries to support three of its projects in New York and Vermont with $1.5 billion. Officials also said they plan to provide $35 million to BAE Systems Inc. for modernization of a New Hampshire plant and $162 million to Microchip Technology Inc. for fab expansions in Colorado and Oregon. 

CHIPS Act funding is aimed to increase the U.S. share of the global chip market, including a 20% slice of leading-edge chips not currently produced domestically. President Joe Biden has promoted the effort as important for both the economy and national security because of chips’ widespread use and U.S. reliance on their production overseas. 

“Don’t forget that we invented these chips, and over time, some thought it was cheaper to send manufacturing overseas because labor was cheaper,” Biden said during the Arizona event. "As a result, when the pandemic shut down chip factories overseas, prices of everything went up.”