More than two years ago, the United States introduced the Chip Act, hoping to encourage the development of the domestic chip industry through massive subsidies. And Intel is the only American owned advanced logic chip manufacturer, which should have been the biggest beneficiary of federal funding under the Chip Act.
However, two years have passed and Intel has not even received a penny. Amidst Intel's poor performance and plummeting market value, the subsidies provided by the Biden administration were supposed to be a lifesaver, but they have yet to be seen, prompting Intel's CEO to publicly complain in recent days.
Intel CEO: Disappointed with the Chip Act
After Thursday's earnings meeting, Intel CEO Pat Gelsinger revealed that he still hasn't been able to secure the promised billions of dollars from the Chip Act.
Although he reiterated that Intel will still push to open chip manufacturing plants in states such as Ohio and Arizona, his statement cannot hide disappointment:
Overall, we consider the Chip Act to be a crucial matter, and we have invested a significant amount of time and effort into it. As we stated on our earnings conference call, we are disappointed with the time it took to complete this bill
It has been over two years since the Chip Act was passed. During this period, I invested $30 billion in the US manufacturing industry, and we have received zero returns from the Chip Act. It has taken too long, and we need to complete it
The money for the Chip Act is nowhere to be found
In August 2022, the United States introduced the "Chip and Science Act of 2022" (also known as the "Chip Act"). The bill claims to provide $52.7 billion in subsidies for the US chip industry. In addition to direct subsidies, the US Congress has also approved $75 billion in government loan authorizations.
Under the call for massive financial support promised by the government, Intel CEO Gale Singh has pledged to invest over $100 billion to expand business in Arizona, Ohio, New Mexico, and Oregon.
However, two years have passed, and the huge amount of funding promised by the Biden administration's Chip Act has yet to be seen.
Since the beginning of this year, due to Intel's failure to catch up with the AI boom, its stock price has fallen by more than 50% and its market value has fallen below $100 billion, making it the worst performing tech giant.
According to Gelsinger, during the company's current "worst" financial period, the Biden administration has yet to disburse the promised $8.5 billion factory building subsidy.
In addition, Intel was supposed to receive $11 billion in loans and up to $25 billion in tax credits, but these financing plans have not yet been approved.
What is the Biden administration hesitating about?
In fact, it is precisely because Intel's business has recently deteriorated that it has raised concerns in the US Congress.
Despite Gelsinger's statement that he will continue to invest in the United States, Intel announced last quarter that it would lay off 15000 employees and delay plans to open a large factory in Ohio, which has heightened concerns among some US government officials about whether Intel can fulfill its promises and whether the huge subsidies it has issued will ultimately go down the drain.
Former Commerce Department official Caitlin Legacki said that the US government also has concerns that "Intel will use chip funding to build a shell factory and never actually start working because they have no customers
In fact, the concerns of the US government are not unreasonable, as Intel has indeed had a "black history" in this regard before.
In 2012, Intel boasted to then US President Obama that it would invest $5 billion to build a semiconductor manufacturing plant in Arizona. However, according to two former Intel employees, although Intel built the building at the time, the factory remained vacant due to a lack of sufficient customers, and it was not until several years later that Intel put the machines into the factory.
Therefore, despite the Biden administration's promise to allocate $8.5 billion in direct funding subsidies to Intel, it has yet to be delivered to the company. On the contrary, the US government has set certain milestones for subsidized companies, including Intel, requiring them to meet benchmark targets - such as building factories, producing chips, or signing up customers - in order to receive partial funding.
Like most companies, Intel has not yet received the first funding for the program. According to sources, Intel has been debating with the government in recent months about the milestones that must be reached before obtaining funding.
The scariest scenario is that you made a big bet and lost, "said Peter E. Harrell, a Carnegie Foundation for International Peace researcher and former White House chip project manager." People who have seen this naturally feel worried
In the past year, Intel has been struggling. Gelsinger recently stated in an interview that he is frustrated with the process of waiting for subsidies under the Chip Act.
Both sides are renegotiating, "Kissinger said." I just want to say, 'Let's get things done.'