P R E M I U M

AI | Wednesday, March 20

Intel Secures Massive CHIPS Bag




The Biden administration just went all-in on Intel becoming a dominant AI player


BREAKING NEWS

Intel stock is surging this morning after preliminary announcements that the company has secured  $8.5 billion in funding from the Biden Administration’s CHIPS Act. Is this enough to put Intel on top?

WHAT HAPPENED

This funding also includes an additional $11 billion in loans. Intel will use this mountain of cash to build and expand their facilities in Arizona, Oregon, New Mexico, and Ohio. The goal here is to create around 30,000 jobs and indirectly support tens of thousands more. The CHIPS Act is focused on securing U.S. dominance in the semiconductor business. There’s a clear political angle to this considering the states where Intel is building these facilities. However, Intel and Biden appear to have much loftier goals here. 


KILLING THE KING

Intel is a special case in this industry because they are trying to restore their foundry business. Most chip companies just design chips and make money off of licensing. Intel also prints semiconductors—and their expanding foundry business is clearly aimed at trying to unseat TSMC as the global leader in advanced chip manufacturing. While TSMC prints the world’s best chips right now—Intel has previously said they are ready to begin production of semiconductors that are denser than TSMC’s best. This is a huge gamble on Intel’s part, but if they pull off expanding a foundry business with this improved tech, they can leapfrog TSMC and be a global semiconductor contender. 


WHY IT MATTERS

Semiconductors are going to be the oil of the 21st century. The fact that Taiwan is the one place on earth where advanced AI chips can actually get built is a huge geopolitical risk. That’s why the Biden Administration is willing to dump nearly $20 billion into Intel. Expanded high-density semiconductor production will be essential to securing U.S. dominance moving forward. For now, investors love getting access to funding like this, so Intel’s stock popped over 3% in early trading. 

 

 


 



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