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At an annual gathering of tech executives and billionaires in Sun Valley, Idaho, this past July, Gina Raimondo commandeered a table near a duck pond and tried to exert her influence as the U.S. secretary of commerce to help rescue an ailing national champion.
As media moguls and business luminaries cut deals nearby, Ms. Raimondo met with chief executives from Microsoft, Google and other firms and encouraged them to order their semiconductors from the United States, including from Intel. It was important to make more chips in America, she told them, and Intel, the American chip giant, was critical to that effort.
Ms. Raimondo, who is overseeing the Biden administration’s investments in the chip industry, has made similar requests in meetings and phone calls over the past year. She has urged executives at Apple, Amazon, Nvidia, AMD, Marvell Technology and other companies to consider ordering chips from Intel’s U.S. manufacturing plants, according to eight people familiar with those requests, most of whom asked for anonymity to discuss private conversations.
A majority of the firms have rejected her overtures because Intel’s chip-making techniques are not as sophisticated as those of Taiwan Semiconductor Manufacturing Co., the world’s leading chip maker and their primary supplier, these people said.
The doubts expressed by top tech executives show how far Intel has fallen at a moment when Ms. Raimondo is trying to rebuild American chip manufacturing. Her unofficial role as a chip salesperson underscores how much is riding on the success of Intel, a 56-year-old firm that is at the center of President Biden’s efforts to rev up domestic semiconductor production.
While the Biden administration’s endeavor involves many companies, a crucial part of its ambition is pegged to Intel, which lobbied — and helped secure votes — for the 2022 CHIPS Act.
Intel, which is the only American-owned maker of advanced logic chips, is the single biggest recipient of federal money from the CHIPS Act, a bipartisan bill aimed at making the United States less reliant on Asia for the tiny electronics that power everything from cars to iPads. Intel is also the sole recipient of a new $3 billion government contract to make advanced chips for the U.S. military.
Backed by promises of more than $20 billion in government support, Intel’s chief executive, Patrick Gelsinger, has committed to invest more than $100 billion to expand in Arizona, Ohio, New Mexico and Oregon. But Intel’s business has recently worsened, causing concern on Capitol Hill and stoking the fears of some administration officials who have worried for years about the company’s ability to deliver on its promises.
Intel’s investments alone account for more than a quarter of the total chip investments that the Biden administration has publicized. Mr. Gelsinger said investments in the United States would proceed, but Intel announced 15,000 layoffs and delayed the opening of a large factory in Ohio, a project that Mr. Biden cited in his State of the Union addresses in 2022 and 2023.
The company’s experience hints at the perils the government faces in designing industrial policy and picking winners and losers in a fast-moving industry. The question now is whether the administration can help Intel turn around its performance or if it will sink billions of dollars into a company that may continue to struggle.
Intel built its empire making chips for personal computers, but it missed out on the industry’s last two major products: smartphones and artificial intelligence chips. Its sales and stock price have plummeted, and potential buyers have been circling the company.
“The nightmare scenario is you have a huge bet that just fails,” said Peter E. Harrell, a fellow at the Carnegie Endowment for International Peace who previously worked on the chips program at the White House. “It’s natural folks looking at this would be worried.”
The Biden administration has hedged its bets by offering money to 20 other foreign and domestic chipmakers to invest in the United States. Officials say their plan to persuade five of the world’s leading chipmakers, including Intel, to build plants in the United States is still on track.
In the two years since the CHIPS Act was passed, the U.S. semiconductor industry has created 115,000 jobs and had more investments in factory construction than it did in the previous 24 years combined, Natalie Quillian, the White House deputy chief of staff, said in a statement. “We’re confident in the success of the CHIPS and Science Act,” she said.
But those efforts have been slowed by a broader downturn in the chip industry. Samsung and Micron Technology have also posted disappointing results over the past year and delayed factories planned in Texas and New York.
Micron said it was preparing for construction and expecting strong financial results next year. Samsung said its facility would start production in 2026.
In an interview, Ms. Raimondo said her requests for companies to buy Intel chips were part of a push on behalf of all U.S. manufacturers.
“Of course, I’d be doing everything I can to make sure Intel is successful,” she said. “But really, my message to any of these companies, whether it’s Apple or AMD or Nvidia, Amazon, all of them, is we need your demand for U.S.-made chips.”
“We’re going to get it done, and that is not dependent on any one company,” she added.
AMD, Nvidia and Marvell declined to comment. Amazon confirmed those conversations, while Apple didn’t respond to requests for comment.
To prevent taxpayer money from being wasted, the administration created certain milestones for the companies it would subsidize. Companies must hit benchmarks — like building a plant, producing chips or signing up customers — before they can receive portions of their funds.
Like most companies, Intel has not yet received its first financial infusion under the program. And in recent months, it has been sparring with the government over the milestones it must hit before it gets funding, five people familiar with the talks said.
Mr. Gelsinger, who has spent the past three months restructuring the company and reassuring investors, said in an interview that he was frustrated with the process.
“There’s been renegotiations on both sides,” Mr. Gelsinger said. “My simple message is, ‘Let’s get it finished.’”
America’s Champion
Ms. Raimondo first met Mr. Gelsinger on a Zoom call in early 2021, where they joked about both being new to their positions. The two had just stepped into roles on opposite coasts of the country, where their interests would quickly become entangled.
Ms. Raimondo — the former governor of Rhode Island and a venture capitalist — had to immediately contend with a global chip shortage, which was shuttering American car factories and slowing the economy.
The Biden administration was also shaken by the country’s dependence on Taiwan, home to TSMC, for advanced chips. Chasing bigger profits, most American chip companies had relocated their manufacturing to Asia, where workers were skilled and cheap. But relying on Taiwan seemed increasingly risky as China sought to bring the island under its control.
In 2021, Ms. Raimondo’s deputies calculated that an interruption in Taiwan’s chip supply could be as harmful to the U.S. economy as the Great Depression had been, two government officials said.
Mr. Gelsinger took over Intel with a plan to catch up to TSMC’s technology and build an expansive new factory business. He wanted the government to help bankroll that effort and joined Ms. Raimondo and other executives in pushing Congress for broader funding. Mr. Gelsinger met with more than 100 lawmakers in 2021 and 2022 to argue that American-owned chip factories were vital to the country’s future.
In March 2022, Mr. Gelsinger was Mr. Biden’s guest at the State of the Union address. In his speech, Mr. Biden described a $20 billion project that Intel had planned for Ohio as a “field of dreams” and said that the company would invest $100 billion across the United States.
“That would be the biggest investment in manufacturing in American history. And all they’re waiting for is for you to pass this bill,” Mr. Biden said to a standing ovation.
In late July, Congress voted to approve the CHIPS and Science Act, one of the most ambitious attempts ever to reshape industry. It gave the Commerce Department $50 billion of funding and a $75 billion loan facility, and created a generous tax credit equal to a quarter of a company’s investments.
In their Washington office, Intel’s lobbyists watched the livestream of the House vote, sharing bottles of beer and congratulations.
Fears of Phantom Plants
As they designed the chips program, Ms. Raimondo and Biden officials weighed how to support Intel while safeguarding taxpayer money. They were already questioning whether Intel could follow through on its promises, several officials said.
David Yoffie, a longtime Intel board member, said he had told officials that Intel had a history of struggling to make chips for others. “Intel was going down a path that I wasn’t confident would succeed,” Mr. Yoffie said.
Caitlin Legacki, a former Commerce Department official, said there also was a fear that “Intel is going to take chips money, build an empty shell of a factory and then never actually open it, because they don’t have customers.” This is why the program was designed to withhold payments until companies hit certain milestones, she said.
Intel’s plant in Arizona was a cautionary tale. In 2012, Intel hosted President Barack Obama at the site and trumpeted a $5 billion investment. It constructed the building, but waited several years to fill the factory with machinery because it didn’t have enough customers, said two former Intel employees.
As Ms. Raimondo negotiated with other chipmakers, like TSMC and Samsung, she also became concerned about appearing too cozy with Mr. Gelsinger, and began trying to minimize their public appearances together, two people familiar with the situation said.
When the White House wanted to once again spotlight Intel’s Ohio investment in the 2023 State of the Union, Ms. Raimondo expressed concerns, cautious about hitching the administration’s reputation to a promise that could be unfulfilled, an official who was involved in the process said.
Ms. Raimondo declined to confirm the account, saying she did not remember it that way.
Too Big to Fail?
In March 2024, the Biden administration announced that it planned to award Intel $8.5 billion in grants to build factories, as well as up to $11 billion in loans. Intel might also be eligible for nearly $25 billion of tax credits.
The same month, Intel filed paperwork in Ohio saying it would delay its plant there by two to three years. It had signed a contract to produce chips for Microsoft but needed more customers to justify its plans.
As 2024 went on, Ms. Raimondo made more forceful requests to companies to consider Intel’s services, chip executives said. Those included conversations with Andy Jassy, the chief executive of Amazon.
The administration also selected Intel as the sole partner for a $3 billion program to make chips for the military. Some chip executives have criticized the program, called Secure Enclave, as a giveaway, but a White House official said Intel was uniquely qualified for the program.
On Aug. 1, Intel announced the results from a disastrous quarter, as its profits fell and it halted a decades-old shareholder dividend. Its stock plummeted 26 percent, its worst trading day in 50 years.
Its shares partially rebounded in mid-September, as it unveiled the Secure Enclave deal and a contract to make chips for Amazon in Ohio.
In a statement, Intel said that more than 2,000 construction workers were on site in Ohio building one of the world’s largest chip factories and that it was “going to finish the job.”
Mr. Gelsinger said Intel had been spending on that project, though it hadn’t received any government funding.
“Obviously, with elections, you know, nigh in front of us, hey, we want this done,” he said.
Ms. Raimondo said that she expected to close more deals before the end of the year, but that she was focused on protecting taxpayers.
“I’m sure all these companies would prefer that we just back up the Brink’s truck of taxpayer money into their parking lot and deposit it into their treasury,” she said. “But I can’t do that.”
Don Clark, Steve Lohr, Madeleine Ngo and Kitty Bennett contributed reporting.
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