Biden Announces $26 Trillion Support for Intel in Swing States... What Is the Strategy?

"We will bring advanced semiconductor manufacturing back to the United States. We will transform the semiconductor industry and create a completely new ecosystem."

[Image source=AP Yonhap News]

On the 20th (local time), U.S. President Joe Biden, who is running for re-election in the upcoming November presidential election, visited the battleground state of Arizona and announced plans to provide the largest-ever subsidies to U.S. semiconductor company Intel. Through this, he aims not only to regain global leadership in semiconductor manufacturing but also to revitalize the local economy by creating jobs, while actively targeting voters in the swing state.

President Biden announced at Intel’s Ocotillo campus in Phoenix, Arizona, that he would provide Intel with subsidies worth up to $8.5 billion (approximately 11.4 trillion KRW). This is the largest subsidy provided so far under the CHIPS and Science Act (CSA). Intel, which plans to invest more than $100 billion in four states including Arizona, Ohio, New Mexico, and Oregon, will also receive loan support worth $11 billion (approximately 14.8 trillion KRW) and up to a 25% tax credit benefit for investments made within the United States, in addition to these subsidies.

President Biden described this as "one of the largest semiconductor investments ever made in the United States," estimating that the jobs created by Intel’s investment will reach 30,000 nationwide. He added, "We invented advanced semiconductors, but currently produce 0%," emphasizing "why this investment is important." The explanation is that by attracting large-scale investments from global semiconductor companies like Intel, the U.S. aims to seize semiconductor supremacy. He stressed, "By 2030, we will be able to produce 20% of the world’s most advanced semiconductors." Pat Gelsinger, Intel’s Chief Executive Officer (CEO), also said, "Today is a decisive moment as the United States and Intel strive to open the great next chapter of semiconductor manufacturing innovation."

President Biden’s emphasis on Intel’s investment and announcement of large-scale support in the battleground state of Arizona ahead of his re-election bid is interpreted as a move to highlight his economic achievements. Recently, President Biden has been politically leveraging government support combined with large-scale private sector investments for the November election. Notably, Arizona was a key battleground state where Biden won by about 10,000 votes in the 2020 presidential election. On this day, President Biden also made remarks targeting Republican presidential candidate and former President Donald Trump. He said, "My predecessor allowed the future to be made in China or other countries, not in America," and added, "Unlike my predecessor, I decided to reverse the situation and invest in America."

The CHIPS and Science Act (CSA), considered one of President Biden’s major legislative achievements, aims to encourage semiconductor investments within the United States by providing a total of $52.7 billion over five years, including $39 billion in semiconductor production subsidies and $13.2 billion in research and development (R&D) grants to companies building production facilities domestically. More than 620 letters of intent for investment have been received from companies so far, and support plans have been announced for four companies including Intel, BAE Systems, Microchip Technology, and GlobalFoundries.

Following Intel, subsidies for Samsung Electronics and TSMC are also expected to be announced soon. Bloomberg reported that Samsung Electronics and TSMC are expected to receive subsidies of $6 billion (approximately 7.96 trillion KRW) and $5 billion (approximately 6.7 trillion KRW), respectively.

The Biden administration is currently showing its intention to become a global advanced semiconductor production hub by providing subsidies not only to domestic companies like Intel but also to foreign semiconductor companies that have made large-scale investments in the United States. BAE Systems, the first recipient of CSA support, is a British company. In particular, the CSA explicitly sends a message to counter China by prohibiting global companies receiving support from expanding their production capacity in China by more than 5% over the next 10 years.

This content was produced with the assistance of AI translation services.