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DeWine calls on Biden administration to release Intel cash, says company won't leave Ohio

XYang2023

Active member
Ohio Gov. Mike DeWine asked President Joe Biden's administration Wednesday to speed up the money needed to accelerate Intel's $28 billion project in central Ohio.

The request comes as Intel faces another delay in a project initially scheduled to be finished in 2025. The company has said 2027 is more likely and others say that may even be too aggressive.

Biden signed legislation to help projects like Intel's chip manufacturing plants in August 2022, but to date, no money has gone out as Intel and the Commerce Department work on the final details.

"This has been something that has been lingering for some time," DeWine told the statehouse bureau. Releasing $8.5 billion in grants and $11 billion in low-cost loans awarded to Intel is important for Ohio and for the future of the country, he added.

Sep 9, 2022; New Albany, Ohio, USA; Gov. Mike DeWine speaks at a groundbreaking ceremony for Intel's $20 billion microchip manufacturing project. Intel has promised two factories in Licking County that will employ 3,000 workers. Mandatory Credit: Adam Cairns/Columbus Dispatch


On Wednesday, DeWine contacted Steve Ricchetti, Counselor to the President who was raised in Ohio, about the importance of the federal government disbursing the money as soon as possible. "He's looking at it, seeing what they can do."

DeWine was emphatic that a slowdown did not mean Intel would leave the state entirely.

"They're putting billions of dollars in the ground already. They can't move that so they're not going to leave Ohio," DeWine said of the project slated for New Albany in Licking County.

 
The final agreements between the CHIPs Act and participants are milestone based. Semiconductor professionals were involved with this negotiation, hopefully the agreements are tight. In my opinion this is a bad look for Intel with the other participants not complaining. The truth will come out at some point in time I assure you.

I'm still wondering how Intel is going to fill those fabs given the current business climate. Having empty fab shells in Ohio is not a good look either.
 
The final agreements between the CHIPs Act and participants are milestone based. Semiconductor professionals were involved with this negotiation, hopefully the agreements are tight. In my opinion this is a bad look for Intel with the other participants not complaining. The truth will come out at some point in time I assure you.

I'm still wondering how Intel is going to fill those fabs given the current business climate. Having empty fab shells in Ohio is not a good look either.
I believe contracts are also meant to be renegotiated. The U.S. needs to use tariffs as a tool. Without such policies, companies would simply rely on foreign sources to maximize their bottom lines.
 
The final agreements between the CHIPs Act and participants are milestone based. Semiconductor professionals were involved with this negotiation, hopefully the agreements are tight. In my opinion this is a bad look for Intel with the other participants not complaining. The truth will come out at some point in time I assure you.

I'm still wondering how Intel is going to fill those fabs given the current business climate. Having empty fab shells in Ohio is not a good look either.
The approach makes sense. You don't want to pay money for someone to build an empty shell and then not produce anything. Pretty sure that's how a lot of China's Big Fund was squandered.
 
The approach makes sense. You don't want to pay money for someone to build an empty shell and then not produce anything. Pretty sure that's how a lot of China's Big Fund was squandered.
Empty shells make sense in the US. The duration for building a factory is multiple times higher than in Taiwan and China. It is true especially for Intel as they started to build their IFS customer base. It might be different for TSMC. From a policy point of view, they should be treated differently.

For Taiwan and China, this does not apply, as they can build infrastructure very quickly, whether based on demand or not.
 
I believe the agreement is to have the machines ready before we release the funds, rather than providing funds upfront for you to purchase the machines. This is not about the speed of Intel’s construction; Intel has slowed down their process due to a lack of orders.
 
I believe the agreement is to have the machines ready before we release the funds, rather than providing funds upfront for you to purchase the machines. This is not about the speed of Intel’s construction; Intel has slowed down their process due to a lack of orders.
The approach doesn’t make practical sense, especially regarding the loan aspect. Finance is about reorganizing cash flows over time. As Dewine mentioned in the report, Intel has contributed significant capital to Ohio’s development, which acts as "collateral" ("They're putting billions of dollars in the ground already. They can't move that so they're not going to leave Ohio,"). For Intel, since IFS has only just started, it requires time. Prematurely committing capital to machinery without knowing the demand is not prudent. Therefore, complementary policies, such as tariffs, should be in place to encourage more companies to consider IFS.
 
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The approach doesn’t make practical sense, especially regarding the loan aspect. Finance is about reorganizing cash flows over time. As Dewine mentioned in the report, Intel has contributed significant capital to Ohio’s development, which acts as "collateral" ("They're putting billions of dollars in the ground already. They can't move that so they're not going to leave Ohio,"). For Intel, since IFS has only just started, it requires time. Prematurely committing capital to machinery without knowing the demand is not prudent. Therefore, complementary policies, such as tariffs, should be in place to encourage more companies to consider IFS.

If IFS wants to postpone the machine move-in for 24 months but receive the funds immediately, it will force them to move in the machines without any orders, would this be beneficial for IFS?

Or could IFS hold the funds for 2 years without move in machines? What would happen if IFS later decided not to proceed with purchasing those machines, but already have the funds?
 
If IFS wants to postpone the machine move-in for 24 months but receive the funds immediately, it will force them to move in the machines without any orders, would this be beneficial for IFS?

Or could IFS hold the funds for 2 years without move in machines? What would happen if IFS later decided not to proceed with purchasing those machines, but already have the funds?
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In addition, US needs fabs (fab spaces) regardless of the election outcome.
 
The final agreements between the CHIPs Act and participants are milestone based. Semiconductor professionals were involved with this negotiation, hopefully the agreements are tight. In my opinion this is a bad look for Intel with the other participants not complaining. The truth will come out at some point in time I assure you.

I'm still wondering how Intel is going to fill those fabs given the current business climate. Having empty fab shells in Ohio is not a good look either.
It's certainly much less money to build shell, and fill that later because that process have a super long lead time. We need to have capacity first. And that's the the direction government should first be looking at.

It's quite silly to talk about milestone based when the labor cost is just not cheap here. Why should companies be spending four years of cash that's going to be sitting there and not generating any returns. If government want to have a strong manufacturing footprint and yield any positive returns. Give out companies a huge prepayment for them to build out the fab shell first. And require them to fill the fab with wafers within a certain timeframe. That should be the ideal way to go.
 
The approach makes sense. You don't want to pay money for someone to build an empty shell and then not produce anything. Pretty sure that's how a lot of China's Big Fund was squandered.
Why should the private companies be spending four years of cash, and let them sit there to generate no return? Why shouldn't the government take care this level of investment?

First there need to be an incentive, direction follows.
 
I believe the agreement is to have the machines ready before we release the funds, rather than providing funds upfront for you to purchase the machines. This is not about the speed of Intel’s construction; Intel has slowed down their process due to a lack of orders.
That's why the CHIPS ACT is a failure, and tariff is what's needed thereafter. If you don't want to raise the tariff, good, I DON'T WANT EITHER. Then pay for the capacity, and require company to take obligation (including TSMC, Samsung, and Intel) otherwise take back and hand over to whom that's trustworthy.
 
If IFS wants to postpone the machine move-in for 24 months but receive the funds immediately, it will force them to move in the machines without any orders, would this be beneficial for IFS?

Or could IFS hold the funds for 2 years without move in machines? What would happen if IFS later decided not to proceed with purchasing those machines, but already have the funds?
Government should always act in their due diligence, if IFS did pospone the machine move-in, take back the control and hand over to whomever that's capable. It will be fab shell build in USA by US government. If Intel didn't do their part, US government can always take back the control and hand over to who that's capable.

Currently, US government has no right to accuse Intel for being sluggish, because the policy is in defect since day 1.
 
In my opinion this is a bad look for Intel with the other participants not complaining.
I don't think it's a bad look. Look, ever since the beginning, I've been hearing Pat trying all the lobbying efforts. TSMC did nothing and get 6 billion in returns. Why? because they are # 1, and will be for a foreseeable future. Samsung need US government to bail out Lee family. They get 6 billions as well.

In the congressional hearing, which only Intel, Micron, and Lam attended, I don't see any other company ever try with that much level of efforts beside Intel.

Without Intel and Micron, there won't be CHIPS act, so appreciate it as it did happen.
 
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In addition, US needs fabs (fab spaces) regardless of the election outcome.
What Pat Gelsinger strikes me the most since the beginning of his appointment, is that his statement on how important the fab shells are. And he's desperate for having additional fab capacity back in 2021. I don't think his attitude ever changed, If he really does have an extra fab shell, he will absolutely find the external client and fill the capacity. Otherwise, they are going to sell CPU/GPU at cost, flooding the markets AMD and Nvidia competing in. But That day will not happen. But we are seeing now is that all the fab shell they are building, a few are really in good shape, I believe they just don't have that capital.

It's really confusing to see the people both expecting Intel to succeed and have many and many job positions in manufacturing yet been so cheap and unintelligent to come out with an incentive that actually encourages companies to invest in.
 
Why should the private companies be spending four years of cash, and let them sit there to generate no return? Why shouldn't the government take care this level of investment?

First there need to be an incentive, direction follows.

The U.S. Congress and the government’s legislative intentions and policy goals for the CHIPS and Science Act are clear. They include:
  1. 1. Increasing semiconductor manufacturing capacity.
  2. 2. Strengthening supply chains.
  3. 3. Broadening access to STEM careers.
  4. 4. Enhancing national security.
  5. 5. Strengthening technological leadership.
In the eyes of the U.S. government and investors, does Intel have enough credibility to be trusted blindly with an $8.5 billion CHIPS Act grant plus an additional $3 billion semiconductor enclave grant?

Intel has a less-than-stellar track record of mothballing expensive fab facilities for extended periods. In the case of Intel Fab 42 in Chandler, Arizona, the facility was completed in 2013 but soon mothballed, only reaching full production six years later, in 2020.

The Aurora Supercomputer project at Argonne National Laboratory is another example. Originally planned to go live in 2018–2019, the project faced multiple delays due to Intel product cancellations and manufacturing challenges, with full "installation" (not running full planned capacity) finally completed in 2023.

CHIPS Act grant money and low-interest loans are intended as incentives and as matching funds for grant recipients. These funds should be a minority portion of the overall project budget, rather than a bailout for recipients experiencing financial hardship. If a recipient cannot afford to build a fab and achieve meaningful production volumes, profits, and a solid customer base, the project is likely not financially viable and should not proceed.

Commerce Secretary Gina Raimondo was a venture capitalist before entering politics. She and the team and advisors she hired understand how to distinguish between financially viable investments and troubled projects. They are performing their public duties responsibly to safeguard taxpayers' money.
 
The U.S. Congress and the government’s legislative intentions and policy goals for the CHIPS and Science Act are clear. They include:
  1. 1. Increasing semiconductor manufacturing capacity.
  2. 2. Strengthening supply chains.
  3. 3. Broadening access to STEM careers.
  4. 4. Enhancing national security.
  5. 5. Strengthening technological leadership.
In the eyes of the U.S. government and investors, does Intel have enough credibility to be trusted blindly with an $8.5 billion CHIPS Act grant plus an additional $3 billion semiconductor enclave grant?

Intel has a less-than-stellar track record of mothballing expensive fab facilities for extended periods. In the case of Intel Fab 42 in Chandler, Arizona, the facility was completed in 2013 but soon mothballed, only reaching full production six years later, in 2020.

The Aurora Supercomputer project at Argonne National Laboratory is another example. Originally planned to go live in 2018–2019, the project faced multiple delays due to Intel product cancellations and manufacturing challenges, with full "installation" (not running full planned capacity) finally completed in 2023.

CHIPS Act grant money and low-interest loans are intended as incentives and as matching funds for grant recipients. These funds should be a minority portion of the overall project budget, rather than a bailout for recipients experiencing financial hardship. If a recipient cannot afford to build a fab and achieve meaningful production volumes, profits, and a solid customer base, the project is likely not financially viable and should not proceed.

Commerce Secretary Gina Raimondo was a venture capitalist before entering politics. She and the team and advisors she hired understand how to distinguish between financially viable investments and troubled projects. They are performing their public duties responsibly to safeguard taxpayers' money.
The policy objective is to revitalize the U.S. semiconductor industry, not to focus on savings, which are minor compared to spending on wars and other policies. Intel's award includes $8.5 billion in grants, while the additional $11 billion is a loan that requires repayment and collateral, as per standard loan terms.

For your own home, would you build, extend, or renovate it first, and then ask the bank for financing? If so, why would you need bank financing in the first place? When you mortgage your home, the bank can lend you money to fund improvements or construction work on it.
 
I don't think it's a bad look. Look, ever since the beginning, I've been hearing Pat trying all the lobbying efforts. TSMC did nothing and get 6 billion in returns. Why? because they are # 1, and will be for a foreseeable future. Samsung need US government to bail out Lee family. They get 6 billions as well.

In the congressional hearing, which only Intel, Micron, and Lam attended, I don't see any other company ever try with that much level of efforts beside Intel.

Without Intel and Micron, there won't be CHIPS act, so appreciate it as it did happen.

The real history is different from what you just mentioned.

After intensive negotiations, Secretary of State Mike Pompeo and his team reached an agreement with TSMC in 2020 to build two fabs in Arizona. At the beginning, the CHIPS Act's progression through U.S. government agencies and Congress was intended to fulfill the U.S. government’s promise to subsidize TSMC's Arizona fab project.

TSMC agreed to build two fabs in Phoenix, Arizona, while the U.S. government promised to make its best effort to pass legislation providing subsidies for the TSMC Arizona project. TSMC understood there was a chance the legislation might face challenges passing both the Senate and the House. Despite this uncertainty, TSMC and the U.S. government, under both the Trump and Biden administrations, moved forward with the project.

Now, there are 2,000 TSMC employees working at the Arizona fabs, which are set to officially begin high-volume production at the beginning of 2025. The CHIPS Act originated largely because of the TSMC Arizona initiative, and TSMC’s Arizona operations will soon demonstrate positive, concrete results.

This collaboration highlights the determination, effort, and trust shared by TSMC, the U.S. government, and Congress—on both the Republican and Democratic sides. It is truly a bipartisan achievement.
 
The policy objective is to revitalize the U.S. semiconductor industry, not to focus on savings, which are minor compared to spending on wars and other policies. Intel's award includes $8.5 billion in grants, while the additional $11 billion is a loan that requires repayment and collateral, as per standard loan terms.

For your own home, would you build, extend, or renovate it first, and then ask the bank for financing? If so, why would you need bank financing in the first place? When you mortgage your home, the bank can lend you money to fund improvements or construction work on it.

We are talking about a business investment (grants or loans) with those goals mandated by the Congress. Financial viability is a must in all business or government investment. It's not a consumer loan for a kitchen renovation.

I believe if Intel can't afford it, Intel should not proceed some of those projects. Because in order to receive the government's $11.5 billion CHIPS Act money ($8.5+$3 billion), Intel needs to spend additional $90 billion, at least, to match the grants. It can bankrupt or kill Intel.
 
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We are talking about a business investment (grants or loans) with those goals mandated by the Congress. Financial viability is a must in all business or government investment. It's not a consumer loan for a kitchen renovation.

I believe if Intel can't afford it, Intel should not proceed some of those projects. Because in order to receive the government's $11.5 billion CHIPS Act money, Intel needs to spend another $90 billion to match the grants. It can bankrupt or kill Intel.
I disagree. A loan is a financial instrument that serves a purpose. Without loans, most people couldn’t afford their homes. The reason TSMC can "afford" it is due to their monopoly position and lower cost base.
 
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