Feds spend $8.5 billion to stop Intel layoffs, and it doesn’t work
Company confirms plans for ending 15,000 jobs, following massive grant just weeks ago to hire Americans
Topline: President Joe Biden’s goal of creating jobs in semiconductor manufacturing is not going as planned.
Technology giant Intel announced that it will be laying off 15,000 workers, even though the company received an $8.5 billion grant from the federal government in March to hire American employees.
Key facts: The CHIPS Act of 2022 provided $39 billion in direct subsidies to tech companies to boost the U.S. chip manufacturing industry. Intel was the biggest beneficiary, and it also got an $11 billion loan meant to support factories in Oregon, Arizona, Ohio and New Mexico.
That wasn’t enough to stop the company from ditching 15% of its workforce.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low,” Intel CEO Patrick Gelsinger said in a press release.
Gelsinger said that since 2020, the company’s workforce grew by 10% but annual revenue fell by $24 billion.
Before the CHIPS Act was passed, Gelsinger suggested the company would move jobs to Europe if it couldn’t secure U.S. federal grants.
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Background: An opinion article in The Hill by Matt Cole and Chris Nicholson claims that “diversity, equity and inclusion” provisions in the CHIPS Act have limited its effectiveness.
Grants are awarded only to companies that “create opportunities for Americans from historically underserved communities” — even if that comes at the expense of profit margins. Cole and Nicholson suggest it’s part of the reason why Intel and Samsung have delayed building factories in Ohio and Texas, respectively.
Others have argued the CHIPS Act doesn’t allocate enough money to have its intended impact.
Because countries like China and Japan are offering similar subsidies, the CHIPS Act won’t be “nearly enough” to help the U.S. meet its goal of producing 20% of the world’s semiconductors by 2030, according to Paul Triolo of the Albright Stonebridge Group.
Triolo and others told the EE Times that a second or third CHIPS Act will be necessary. Perhaps that should be on hold until the first one shows positive results.
Summary: It’s good to stop U.S. jobs from going overseas but not if we’re creating jobs that disappear shortly after they get taxpayer funds.
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Originally Published at Daily Wire, World Net Daily, or The Blaze
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