Biden To Present Intel With CHIPS Act Award, Cementing Arizona As Semiconductor Hotspot: Report

Zinger Key Points
  • Along with Intel, grants for TSMC and Samsung are also expected to be announced soon.
  • Arizona is a key state for access to customers. It's also a key state politically for Biden

President Joe Biden is expected to award a multi-billion dollar award to Intel Corporation INTC to expand semiconductor production in the U.S.

The funding is part of the CHIPS and Science Act, a $280 billion package Biden signed into law in 2022.

Biden is expected to announce the award alongside Commerce Secretary Gina Raimondo.

Intel announced in October that it had broken ground on a new fabrication plant (fab) at its Ocotillo campus in Chandler, Arizona, where it has plans to build two new fabs with a project price tag of $20 billion.

Reuters reports that Intel’s award will likely include a mix of loans and grants from the government’s $53 billion CHIPS and Science Act fund. It’s also expected to be the biggest award to be granted so far from the 2022 Act, which aims to cut down the U.S.’s dependence on critical technological components imported from abroad.

Last month, GlobalFoundries Inc GFS received $1.5 billion of CHIPS Act grants to support the expansion of its production facility in Malta, New York, including the construction of a new fab. The company added that it would also use the funds to expand capacity at its Vermont fab.

Also Read: GlobalFoundries To Scoop $1.5 Billion In CHIPS Act Grants: What It Means For Semiconductor Sector

TSMC And Samsung Next?

The Biden Administration is expected to announce a series of new grants from the fund over the coming weeks, including around $5 billion for Taiwan Semiconductor Manufacturing Corp. TSM, which is investing a total of $40 billion in two fabs near Phoenix, Arizona.

Indeed, Arizona is becoming a major hub for semiconductor production. The state traces its technology history back to 1949 when Motorola opened a lab to develop transistors for electrical equipment.

Aside from giants such as Intel and TSMC, the state is home to more than a hundred other chip-related companies, including NXP Semiconductors NXPI, so it’s had a head start in the industry with plenty of talent for producers to choose from.

It has also been rumored that South Korean chipmaker Samsung is also set to be awarded a CHIPS Act grant and that it could also be launching a multi-billion dollar fab in Arizona.

Semi-Conscious State

So, why is the Copper State so popular? It’s a combination of climate, geology and geography.

The state has an arid climate. Since semiconductor fabs are moisture-free environments, companies won’t have as many costs related to climate and humidity controls.

Arizona is also considered a low natural disaster risk, when it comes to earthquakes, flooding and hurricanes.

It’s also close to the Palo Verde Nuclear Generating Station, so fabs in the region have a steady and reliable source of power. It also shares a border with California where many of the Big Tech names that are the biggest users of semiconductors are located.

Another important factor is that Arizona is a crucial swing state for Biden in the upcoming presidential election. Biden narrowly won in Arizona back in 2020 against then-President Donald Trump.

Chip stocks have been among the best performers of 2024, but have retraced a little in the past few days. The VanEck Semiconductor ETF SMH, which holds TSMC and Intel along with tech giant Nvidia Corporation NVDA, is up 28% in 2024.

Now Read: TSMC To Win $5B Grant For US Plant To Service Apple, Nvidia Chip Demand: Report

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