Biden in Arizona: Why 'chips' are one of the most important projects of his presidency
President Joe Biden came to Chandler on Wednesday armed with a simple argument: his economic plans are working.
"We have more to do. I get it: we have more to do. But no question, our plan of delivering for the American people is working now," Biden said to a crowd of hundreds of people at Intel’s Ocotillo Campus.
His targeted investments in U.S. industries, which the White House has dubbed the 'Investing in America' program, have "ignited a manufacturing boom in America, a clean energy boom, a jobs boom, all here in America, finally," he said.
Construction spending on manufacturing has roughly doubled since 2021, according to U.S. Department of Treasury data.
Still, surveys suggest that many Arizonans don’t feel they have benefited from Biden’s economic accomplishments, or they believe the economy was better under Trump.
The purpose of Biden's visit was to announce a multi-billion grant for semiconductor manufacturing: a topic obscure to many voters, yet central to the economic, political and geostrategic projects of Biden's presidency.
His announcement centered around the 2022 CHIPS and Science Act, a Biden-signed law geared toward promoting semiconductors, also known as “chips,” a key technology present in most electronics.
Biden announced a CHIPS Act grant of $8.5 billion for the technology company Intel, which has been massively expanding its manufacturing facilities in Chandler. The government could make up to $11 billion in loans available as well, plus a federal investment tax credit of up to 25% of certain expenses.
Biden struck an optimistic tone for America's manufacturing future in his 17-minute talk, declaring that his CHIPS Act legislation is "bringing the jobs of the future back to America."
Biden cited Intel's operations in Arizona and Ohio as the leading benefactors of the Commerce Department's decision to provide $8.5 billion in grant money and up to $11 billion in loans to the Silicon Valley giant.
Biden vowed that the CHIPS Act legislation would help all Americans, but he made sure to point to union jobs and those that can benefit people lacking college degrees.
His administration's economic policies are designed to rebuild America "from the middle out and bottom up, not from the top down," he said.
Earlier, Intel CEO Pat Gelsinger noted that he joined the company as a technician lacking a four-year college degree. Biden said many of the 10,000 manufacturing jobs that Intel could create as a result of the CHIPS Act legislation will feature average salaries of more than $100,000, "and they don't all require a college degree."
Around 40% could involve technician positions, company officials said.
Christy Pambianchi, Intel's chief people officer, encouraged potential applicants to see what's available on the Intel.com website. She also emphasized the company's training and apprenticeship program through the Maricopa Community College system.
A desire to lessen America's dependence on advanced semiconductors also factored into Biden's talk during the sunny and warm noontime hour. The COVID-19 pandemic exposed the country's vulnerability to supply chain disruptions, Biden said. Advanced chip manufacturing is making a comeback in America after 40 years.
"If it was invented in America, it ought to be made in America," he said, in reference to semiconductors.
Keyvan Esfarjani, Intel's chief operations officer, emphasized the need for the U.S. to re-establish dominance in advanced semiconductors, partly for national security reasons.
"More than 90% of the advanced chips are currently made outside the U.S.," he told reporters covering the event. "That is definitely not OK."
Esfarjani also emphasized the need to develop more of a domestic supply chain for the critical industry.
Commerce Secretary Gina Raimondo, who was part of Biden's entourage along with Rep. Greg Stanton, D-Ariz., said Biden is "tired of being at the end of the supply chain," adding that the CHIPS Act funding is designed to change that.
The administration seeks to have 20% of advanced semiconductors made in this country by the end of the decade, up from none currently, she said.
Weaning the United States off supply chains in east Asia was main idea behind the CHIPS Act, which Biden signed in 2022, said Dale Rogers, a professor at Arizona State University's Department of Supply Chain Management. The military applications of chips made that all the more important, he said.
"The U.S. government has said, 'Look, this is incredibly important in business, but it's also how you fight a war. ... We won't be safe unless we take back our leadership in the semiconductor industry,'" Rogers said.
The U.S. used to manufacture about a third of semiconductors globally. Now it only makes about 12%, according to White House data. The leading chips manufacturer is Taiwan, which is widely seen as at risk of a Chinese invasion in the coming years.
The president and his advisers have argued that goal goes hand-in-hand with the effort to revitalize American manufacturing. It's Biden's effort to win back voters who were seduced by former President Donald Trump's "America First" platform.
Before he was scheduled to deliver remarks, Biden toured parts of Intel's facilities.
The tour included a stop in a room usually used for semiconductor manufacturing.
Biden’s entourage included Commerce Secretary Gina Raimondo, Rep. Greg Stanton, D-Ariz., Phoenix Mayor Kate Gallego, and Intel CEO Pat Gelsinger.
Five chip “wafers” were displayed on the table in front of Biden.
“I was stunned at how thin the fibers are,” Biden said, holding one of the wafers.
“I’ll be darned,” he said. “You’re bringing the future back to America.”
In Wednesday’s remarks, Biden contrasted that with Republicans’ agenda, noting that the vast majority of GOP lawmakers voted against the CHIPS and Science Act.
“Unlike my predecessor, I was determined to turn things around: to invest in America, and all Americans,” he said, referring to Trump.
In a news release sent before Wednesday’s Intel event, Trump’s campaign circulated an op-ed published in The Hill arguing that the diversity-focused provisions of the CHIPS Act were preventing it from getting off the ground.
“CHIPS and Science Act money has been sluggish,” the op-ed reads. That’s because “the CHIPS Act is so loaded with DEI pork that it can’t move,” they argue, pointing to provisions that are geared towards boosting minority participation in the budding industries.
That’s a matter of debate among analysts on both sides of the aisle.
Arizona set to be a major beneficiary of the CHIPS Act
Arizona is on track to be a major beneficiary of the CHIPS Act. The Phoenix area has become one of the nation's hubs for the growing semiconductor supply chain. The law has helped usher in some of the largest investments in Arizona history, and Arizona State University is playing a central role in research and development.
"I think this is a game-changer for the nation, it's a game-changer for our state, and it's a game-changer for Phoenix," said Sally Morton, an Arizona State University professor who is leading the university's response to the CHIPS Act. "We are poised to really be the epicenter of chips manufacturing, but also research, and development, and prototyping."
"We're starting to see, with this announcement (Wednesday), as well as the work that's happened so far, that engine starting to run at high speed in the Phoenix area."
But the idea behind the CHIPS act is still "mostly a story" and not a concrete reality, Rogers said, because most of the funds remain on federal balance sheets.
Intel stands to receive $8.5 billion in grants under the federal CHIPS Act, with money spread among Arizona and three other states. Intel hasn't broken down how much the Arizona allotment might be. However, Esfarjani, the company's chief operations officer, said there's often a 13-times multiplier effect of local communities, meaning that each dollar invested by Intel in Chandler will engender $13 in other investments from local suppliers and even secondary firms like hotels.
"When we come (to a community), the suppliers come with us," he said.
Intel expects its advanced chips from CHIPS Act funding to start showing up in the marketplace by 2025. Esfarjani also bristled at one reporter's question about the need for a well-capitalized company like Intel to need $8.5 billion in federal grants.
"This is definitely not a bailout," he said. "Intel is investing billions of dollars ourselves."
The $8.5 billion in CHIPS funding that Intel stands to receive, in addition to up to $11 billion in federal loans, will help expand two fabs or factories in Chandler and help bring the company's most advanced semiconductors to the market. Building factories like these "are like building a city," Esfarjani said.
CHIPS Act's growing pains play out in Arizona
Some CHIPS Act challenges have played out at the local level in the Phoenix area.
The semiconductor company TSMC has announced several delays in its efforts to build two large factories in Arizona. First, the company said there was a lack of skilled labor and spent several months in negotiations with workers amid reports of unsafe conditions at their work sites.
In January, Taiwan Semiconductor Manufacturing Co. announced a second round of delays.
Biden's top economic advisers have warned that environmental permitting could stand in the way of the CHIPS rollout. A bipartisan group of senators, among them Sen. Mark Kelly, D-Ariz., have advanced a proposal that would allow certain CHIPS-related projects to bypass environmental reviews, or limit the timeline for environmental challenges in court. That measure has stalled in the House.
For his part, Kelly cheered Wednesday's Intel announcement.
"This announcement signals to the world that we’re not joking when we say we’ll once again lead the world in microchip manufacturing, or anything else for that matter," Kelly said. "Intel is going to be producing their most advanced chip at scale there in Chandler at the new facilities that President Biden visited today."
Kelly repeatedly noted the chips will be the most advanced ever built in the U.S. Experts still expect the most advanced chips in the world to be manufactured outside the U.S. at least in the near term.
"For Arizona, what today’s announcement means is really good-paying jobs,” he said.
It’s part of what Kelly sees as a mutually beneficial public-private relationship with the state’s public universities. Intel has developed a training program to prepare people to begin working as a semiconductor technician, he said.
Also, Arizona State University is working on developing new semiconductor technology that could replace silicon as a component of chips with diamonds. It could lead to chips that operate faster and generate less heat to be produced by companies like Intel, Kelly said.
Chris Camacho, CEO of the Greater Phoenix Economic Council, said that in addition to the work directly supported by Intel, 35 suppliers have set up in Arizona as part of the operation. All of this, he said, is leading community colleges to reconfigure job-training programs to take advantage of the expected needs.
Meanwhile, ASU has seen its engineering school mushroom from 5,000 students in 2006 to 33,000 now, Camacho said.
What's next: TSMC hits construction milestone at Phoenix facility
Republic reporter Ronald J. Hansen contributed to this story.
Laura Gersony covers national politics for The Arizona Republic. Contact her at [email protected] or 480-372-0389.
This article originally appeared on Arizona Republic: President Joe Biden in Chandler to announce $8.5 billion for Intel