Biden boosts Intel with massive CHIPS payout in swing state Arizona

President Joe Biden traveled to Arizona Wednesday to announce that chipmaking giant Intel would be getting billions of dollars as part of a landmark industrial policy that he's hoping will help pave the way for his reelection.

But while the visit to the company's campus outside Phoenix reflected the central political bet Biden is making — that domestic spending and jobs promises will capture more voters — it also underscored how difficult it's been to pull it off.

The grant is the largest award to be made from the bipartisan CHIPS and Science Act of 2022, which directed $39 billion in subsidies to boost U.S. competitiveness in semiconductors.

“We will enable advanced semiconductor manufacturing to make a comeback here in America after 40 years. It’s going to transform the semiconductor industry and create entirely new ecosystems,” Biden said.

Biden said Intel would also invest “over $100 billion” across the country, in facilities in Arizona, Oregon, Ohio and New Mexico. Those investments should put the U.S. on track to produce roughly 20 percent of the world’s leading-edge chips by 2030, Biden said. He added that Intel’s new projects are expected to create 30,000 jobs nationwide in construction and manufacturing.

While Democrats rushed to praise the president, others often aligned with the party accused Biden of not doing enough to protect their interests as he sought a quick political win.

Shawn Fain, president of the United Auto Workers, noted that Intel has not signed an enforceable agreement allowing workers to form a union. Fain endorsed Biden in January after months of delay over concerns the White House policy advancing electric vehicles could harm union labor.

“Workers in the auto industry know the importance of a strong semiconductor supply chain,” he said in a statement, urging Intel to “not just talk the talk, but walk the walk, and that means signing a neutrality agreement.”

The news quickly electrified the Arizona political landscape. All four Republican House representatives voted against the bill that Democrats supported.

Rep. Ruben Gallego, the Democratic contender for the seat of outgoing independent Sen. Kyrsten Sinema rushed to claim credit for the Intel award.

“Arizona has become an economic engine for the entire country, and I am proud to have helped secure this historic funding to bring thousands more good-paying jobs to Arizona,” he said in a statement.

His Republican rival Kari Lake, a close Trump ally, praised Intel in a statement but dinged diversity initiatives baked into the Commerce Department’s guidance for CHIPS applicants.

“Hopefully, some of the onerous DEI rules the Biden Administration has written into the CHIPS Act can be undone so that unlike previous investments under this program the tax dollars will achieve what they're actually intended for,” her campaign said.

Sen. Mark Kelly (D-Ariz.), who is not facing reelection, called the announcement “huge news” that will “create a lot of great-paying jobs that don’t require a four-year degree.” He and Sinema negotiated CHIPS, with Sinema saying she “was proud to lead our bipartisan CHIPS and Science Act into law.”

Arizona GOP strategist Chuck Coughlin said in an interview that tech manufacturing has been "transformative" for the state's economy over the past decade. Speeches like Biden’s Wednesday are “hugely helpful” for connecting visible signs of progress, such as cranes in the sky near sites like Intel’s, to the federal policy and Biden himself.

However, he said that Republican candidates running for Congress and the state’s legislative contests have avoided discussing these changes, despite the bipartisan passage of the law.

“They don't want to give the president or this Congress any credit. They're caught in that Trump negative cycle,” he said. “It's not perceived as their victory. It’s perceived as part of Biden's legislative accomplishments.”

The Intel announcement comes as Americans give Biden poor marks for his economic leadership, with only 35 percent approving, according to a February AP-NORC Center for Public Affairs poll. And local and national groups warned of possible harm to labor and environmental protections.

Asked to respond to the groups’ concerns, Intel spokesperson William Moss said in a statement: “We recognize and respect the fact that our employees have a legal and fundamental right to support or oppose representation by a union. It is our view that union representation and the payment of union dues are not necessary at Intel to be treated fairly, with dignity, with respect, and to receive competitive wages and benefits.”

Administration officials would not comment on whether Biden announced the Intel deal in Arizona for political reasons. But the president’s campaign pointed to semiconductors ahead of his travel.

“With abortion on the ballot in both Nevada and Arizona, new, good-paying jobs to tout in clean energy and chips manufacturing, and organized labor behind us, the Biden-Harris campaign is in a strong position to continue to win these voters across the Southwest,” the campaign said Monday in a statement.

Intel CEO Pat Gelsinger was a major force behind the CHIPS and Science Act’s 2022 passage, repeatedly urging Congress to advance the bill.

“These investments, our investments are powering the next great chapter of American innovation,” he said Wednesday in Arizona during Biden’s visit.

In addition to the grant, Intel will get an $11 billion loan from the Commerce Department and it is also taking advantage of the CHIPS and Science Act’s tax credit, allowing it to claw back 25 percent of its investments in new chipmaking facilities and equipment.

Gelsinger told reporters Tuesday that Intel expects to eventually claim “the full amount,” more than $25 billion in breaks over five years. Administration officials said today’s $8.5 billion grant is separate from the $3.5 billion that Capitol Hill recently earmarked for a “secure enclave” which would produce advanced chips for the Defense Department and U.S. intelligence agencies.

Between the grant, the loan and the tax credit, Intel is on track to receive more than $44.5 billion in support from Washington.

This is the second CHIPS grant that will benefit Arizona. Microchip Technology Inc., based in the state, got $162 million in January to triple the output of fabs in Colorado and Oregon that supply products from consumer electronics to weapons systems. An additional $35 million grant went to defense contractor BAE Systems Inc. to modernize its Nashua, New Hampshire facilities. In February, the New York-based GlobalFoundries was awarded a proposed $1.5 billion for its plants in New York and Burlington, Vermont.

The awards are preliminary, and grantees will have to pass due diligence with the CHIPS Program Office. The Biden administration has said the CHIPS office is negotiating with applicants like TSMC, Samsung and Micron as well.