The U.S. "CHIPS Act" has been delayed again! Intel CEO complains: not a penny has been seen

More than two years ago, the United States launched the CHIPS Act, hoping to encourage the development of the domestic chip industry through substantial subsidies. Intel is the only American-owned advanced logic chip manufacturer and was originally expected to be the biggest beneficiary of the federal funds from the CHIPS Act.

However, two years later, Intel has not received a single penny. At a time when Intel's performance is poor and its market value has plummeted, the subsidies promised by the Biden administration should have been a lifeline, yet they have been conspicuously absent, prompting Intel's CEO to publicly express his frustration recently.

Intel CEO: Disappointed with the CHIPS Act

After the market closed on Thursday Eastern Time, Intel CEO Pat Gelsinger revealed during the earnings call that the company still has not received the promised billions of dollars from the CHIPS Act.

Although he reiterated that Intel will continue to push for chip manufacturing plants in states like Ohio and Arizona, his statement could not hide his disappointment:

"Overall, we view the CHIPS Act as a critically important matter, and we have invested a significant amount of time and energy into it. As we mentioned during the earnings call, we are disappointed with the time it has taken to complete this act."

"The CHIPS Act has been in place for over two years. During this time, I have invested $30 billion in U.S. manufacturing, while our returns from the CHIPS Act have been zero. This has taken too long, and we need to get it done."

The funds from the CHIPS Act are nowhere to be seen

In August 2022, the U.S. introduced the CHIPS and Science Act of 2022 (the CHIPS Act). The act claims to provide $52.7 billion to subsidize the U.S. chip industry. In addition to direct subsidies, Congress also approved $75 billion in government loan authorizations.

In response to the government's commitment of substantial funding support, Intel CEO Pat Gelsinger promised to invest over $100 billion to expand operations in Arizona, Ohio, New Mexico, and Oregon.

However, two years later, the substantial funds promised by the Biden administration under the CHIPS Act have yet to materialize.

This year, due to Intel's failure to keep up with the AI boom, Intel's stock price has fallen by more than 50%, and its market value has dropped 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 in plant subsidies.

In addition, Intel was also 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 concerns have arisen in Congress.

Although Gelsinger stated that he would continue to invest in the U.S., Intel announced last quarter that it would lay off 15,000 employees and delay plans for a large factory in Ohio, which has heightened concerns among some U.S. government officials about whether Intel can fulfill its commitments and whether the substantial subsidies granted will ultimately "go to waste." Former Commerce Department official Caitlin Legacki stated that the U.S. government has another concern that "Intel might take the chip funding, build a shell factory, and then never actually start operations because they have no customers."

In fact, the U.S. government's concerns are not unfounded, as Intel has indeed had a "dark history" in this regard.

In 2012, Intel boasted to then-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 that time, it remained vacant for years due to a lack of sufficient customers, and it wasn't until years later that Intel put machines into the factory.

Therefore, despite the Biden administration's promise to allocate $8.5 billion in direct funding subsidies to Intel, the funds have yet to be delivered to the company. Instead, the U.S. government has set certain milestones for companies receiving subsidies, including Intel, requiring them to meet benchmark goals—such as building factories, producing chips, or signing customers—before receiving part of the funding.

Like most companies, Intel has not yet received the first tranche of funding from the program. According to sources, Intel has been in discussions with the government in recent months over the milestone issues that must be met before obtaining funding.

"The worst-case scenario is that you made a huge bet and lost," said Peter E. Harrell, a researcher at the Carnegie Endowment for International Peace and a former White House official responsible for chip projects. "Those who have seen this happen naturally feel concerned."

Over the past year, Intel has been struggling. Gelsinger recently expressed his frustration with the process of waiting for the CHIPS Act subsidies in an interview.

"Both sides are renegotiating," Gelsinger said. "I just want to say, 'Let's get this done.'"