Chip manufacturing in US: US President Joe Biden has allocated nearly $20 billion in grants and loans to Intel (INTC.O), in what stands as the largest government investment yet to support cutting-edge chip production within the United States. This move aims to boost domestic semiconductor output, with Biden announcing a preliminary agreement for $8.5 billion in grants and potential loans of up to $11 billion for Intel's operations in Arizona. 

The funding will facilitate the construction of two new factories and the modernisation of an existing facility.

Addressing the acute semiconductor shortage worsened by the pandemic, Biden highlighted the importance of revitalising advanced semiconductor manufacturing within the country. Criticising former President Donald Trump's policies, Biden committed that he would ensure that the products invented in the US are also manufactured domestically, aiming to reverse the trend of job outsourcing.

Most important investment 

Commerce Department Secretary Gina Raimondo hailed this initiative as one of the most important investments in US semiconductor manufacturing to date. The Biden administration aims to elevate the US share of advanced chip production from its current level of 0 per cent to 20 per cent by 2030 through this subsidy program, aligning with the objectives outlined in the 2022 CHIPS and Science Act, which earmarks $52.7 billion for boosting domestic semiconductor output.

This investment underlines the Biden administration's focus on reducing reliance on chip manufacturing in China and Taiwan. With the US semiconductor manufacturing capacity declining over the years, initiatives like the CHIPS Act aim to mitigate risks associated with foreign dependency, particularly given geopolitical tensions surrounding Taiwan, a key player in global semiconductor production.

Republican US Representative Michael McCaul, a proponent of legislation shaping the CHIPS Act, expressed support for Wednesday's announcement, highlighting bipartisan efforts to strengthen America's semiconductor industry.

(With Reuters inputs)