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Intel Receives $8.5 Billion in Grants to Build Chip Plants

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President Biden on Wednesday awarded $8.5 billion in grants to Intel, a major investment to bolster the nation’s semiconductor production, during a tour of battleground states meant to sell his economic agenda.

Speaking from the Intel campus in Chandler, Ariz., Mr. Biden said the award would support thousands of new manufacturing jobs, including ones that do not require a college degree.

“It’s going to transform the semiconductor industry,” Mr. Biden said. “Where the hell is it written saying that we’re not going to be the manufacturing capital of the world again?”

The award, which will go to the construction and expansion of Intel facilities around the United States, is the biggest the federal government has made with funding from the CHIPS Act, which lawmakers passed in 2022 to help re-establish the United States as a leader in semiconductor manufacturing.

The Biden administration, equipped with $39 billion in subsidies to distribute, is spearheading an ambitious effort to ramp up production of the tiny chips that power everything from smartphones to computers and cars. The effort is at the center of Mr. Biden’s goal to reduce America’s reliance on foreign countries: Although semiconductors were invented in the United States, only about 10 percent of the world’s chips are made domestically.

“Nearly all manufacturing of leading-edge chips across the entire industry moved overseas to Asia years ago,” Mr. Biden said. “That’s why today’s investment is such a big deal: We will enable advanced semiconductor manufacturing to make a comeback here in America.”

In addition to the grants, the federal government is planning to award Intel up to $11 billion in loans on what the company characterized as generous terms. Intel is also expected to claim federal tax credits that could cover 25 percent of the expense of its U.S. expansion projects, which are expected to cost more than $100 billion over five years.

The grants are intended to help fund the company’s construction plans in Arizona, Ohio, New Mexico and Oregon. The projects are expected to create more than 10,000 manufacturing jobs and roughly 20,000 construction jobs, according to Biden administration officials.

Commerce Secretary Gina Raimondo, whose department is overseeing the distribution of the grants, said the award would help ramp up the country’s production of the most advanced semiconductors, which are used in artificial intelligence, smartphones, supercomputers and the most sensitive military hardware. The United States currently produces none.

Ms. Raimondo said the Intel award would be the single largest grant to a chipmaker under the new program. The investment will help put the United States on track to produce roughly 20 percent of the world’s leading-edge chips by the end of the decade, she said.

“This investment will enable Intel to produce leading edge, the most sophisticated chips in the world that will power our economic and national security,” Ms. Raimondo said at the Intel campus on Wednesday.

In Arizona, the money will help fund Intel’s recent construction of two advanced plants and the modernization of another facility. The money will also help establish an entirely new site near Columbus, Ohio, starting with two factories, in its first move to a new U.S. region in more than 40 years.

In Rio Rancho, N.M., Intel will use the federal funds to transform two plants into advanced packaging facilities, where chips are assembled together to enhance performance and reduce costs. The company will also expand and modernize an innovation hub in Hillsboro, Ore., which is expected to further the company’s technological leadership and development of new innovations.

Mr. Biden and his Democratic allies view the semiconductor investments as a key way to try to turn around perceptions of the economy among voters in battleground states like Arizona.

“We have not been talking to folks about the issues that President Biden has been delivering on, and that’s what we are determined to do,” Yolanda Bejarano, the Arizona Democratic Party chairwoman, said on Tuesday, adding that Democrats would need to talk more about the effects of the semiconductor investments.

Although Intel will have to meet certain milestones before the money is distributed, senior Biden administration officials said they expected the funds to start flowing to the company by the end of this year.

Patrick Gelsinger, Intel’s chief executive, told reporters in a briefing on Tuesday evening that the government incentives represented a proud moment for his company and a major achievement for politicians of both parties. Though satisfied with the incentives earmarked for Intel, he said officials might need to invest more in the industry to reverse decades of shifting investment from the United States to countries in Asia.

“It doesn’t get fixed in one three- to five-year program,” Mr. Gelsinger said. “I do think we’ll need at least a CHIPS 2 to finish that job.”

Intel is the fourth company to receive a federal award under the new program, and brings the total announced grants to more than $10 billion. The first three grants — to GlobalFoundries, Microchip Technology and BAE Systems — were to makers of legacy chips, which are created with older production processes but are still used in many products like cars and dishwashers.

Biden administration officials are expected to announce more awards in the coming months to other major chipmakers, including the Taiwan Semiconductor Manufacturing Company, Samsung and Micron Technology. Those companies have also made major investments in new or expanded semiconductor manufacturing plants in the United States in recent years.

The United States’ dependence on Asia for its chips has become even more pronounced with the rise of artificial intelligence. Nearly all chips used to power the latest generative A.I. services were manufactured in Taiwan by T.S.M.C., though designed by the Silicon Valley company Nvidia.

Intel has been trying to change that by developing new manufacturing technology, beginning to build chips designed by other companies and lobbying heavily for the legislation. The investment in Intel is intended to help enable U.S. companies to lead in the A.I. industry by ensuring there is a domestic supply of advanced chips.

About $50 million of federal funding will be set aside for Intel to spend on training and developing “a new generation of workers for the semiconductor industry,” Mr. Biden said. Many semiconductor companies and industry groups have voiced concerns about potential shortages of technicians, engineers and other workers to fill all of the positions that will be created once the facilities are constructed.

In total, private companies have announced more than $240 billion in semiconductor and electronic manufacturing investments since Mr. Biden took office, according to administration officials. Some chipmakers, however, have run into obstacles while trying to expand their domestic manufacturing capacity, resulting in delays.

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The Paris Olympics’ One Sure Thing: Cyberattacks

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In his office on one of the upper floors of the headquarters of the Paris Olympic organizing committee, Franz Regul has no doubt what is coming.

“We will be attacked,” said Mr. Regul, who leads the team responsible for warding off cyberthreats against this year’s Summer Games in Paris.

Companies and governments around the world now all have teams like Mr. Regul’s that operate in spartan rooms equipped with banks of computer servers and screens with indicator lights that warn of incoming hacking attacks. In the Paris operations center, there is even a red light to alert the staff to the most severe danger.

So far, Mr. Regul said, there have been no serious disruptions. But as the months until the Olympics tick down to weeks and then days and hours, he knows the number of hacking attempts and the level of risk will rise exponentially. Unlike companies and governments, though, who plan for the possibility of an attack, Mr. Regul said he knew exactly when to expect the worst.

“Not many organizations can tell you they will be attacked in July and August,” he said.

Worries over security at major events like the Olympics have usually focused on physical threats, like terrorist attacks. But as technology plays a growing role in the Games rollout, Olympic organizers increasingly view cyberattacks as a more constant danger.

The threats are manifold. Experts say hacking groups and countries like Russia, China, North Korea and Iran now have sophisticated operations capable of disabling not just computer and Wi-Fi networks but also digital ticketing systems, credential scanners and even the timing systems for events.

Fears about hacking attacks are not just hypothetical. At the 2018 Pyeongchang Winter Olympics in South Korea, a successful attack nearly derailed the Games before they could begin.

That cyberattack started on a frigid night as fans arrived for the opening ceremony. Signs that something was amiss came all at once. The Wi-Fi network, an essential tool to transmit photographs and news coverage, suddenly went down. Simultaneously, the official Olympics smartphone app — the one that held fans’ tickets and essential transport information — stopped functioning, preventing some fans from entering the stadium. Broadcast drones were grounded and internet-linked televisions meant to show images of the ceremony across venues went blank.

But the ceremony went ahead, and so did the Games. Dozens of cybersecurity officials worked through the night to repel the attack and to fix the glitches, and by the next morning there was little sign that a catastrophe had been averted when the first events got underway.

Since then, the threat to the Olympics has only grown. The cybersecurity team at the last Summer Games, in Tokyo in 2021, reported that it faced 450 million attempted “security events.” Paris expects to face eight to 12 times that number, Mr. Regul said.

Perhaps to demonstrate the scale of the threat, Paris 2024 cybersecurity officials use military terminology freely. They describe “war games” meant to test specialists and systems, and refer to feedback from “veterans of Korea” that has been integrated into their evolving defenses.

Experts say a variety of actors are behind most cyberattacks, including criminals trying to hold data in exchange for a lucrative ransom and protesters who want to highlight a specific cause. But most experts agree that only nation states have the ability to carry out the biggest attacks.

The 2018 attack in Pyeongchang was initially blamed on North Korea, South Korea’s antagonistic neighbor. But experts, including agencies in the U.S. and Britain, later concluded that the true culprit — now widely accepted to be Russia — deliberately used techniques designed to pin the blame on someone else.

This year, Russia is once again the biggest focus.

Russia’s team has been barred from the Olympics following the country’s 2022 invasion of Ukraine, although a small group of individual Russians will be permitted to compete as neutral athletes. France’s relationship with Russia has soured so much that President Emmanuel Macron recently accused Moscow of attempting to undermine the Olympics through a disinformation campaign.

The International Olympic Committee has also pointed the finger at attempts by Russian groups to damage the Games. In November, the I.O.C. issued an unusual statement saying it had been targeted by defamatory “fake news posts” after a documentary featuring an A.I.-generated voice-over purporting to be the actor Tom Cruise appeared on YouTube.

Later, a separate post on Telegram — the encrypted messaging and content platform — mimicked a fake news item broadcast by the French network Canal Plus and aired false information that the I.O.C. was planning to bar Israeli and Palestinian teams from the Paris Olympics.

Earlier this year, Russian pranksters — impersonating a senior African official — managed to get Thomas Bach, the I.O.C. president, on the phone. The call was recorded and released earlier this month. Russia seized on Mr. Bach’s remarks to accuse Olympic officials of engaging in a “conspiracy” to keep its team out of the Games.

In 2019, according to Microsoft, Russian state hackers attacked the computer networks of at least 16 national and international sports and antidoping organizations, including the World Anti-Doping Agency, which at the time was poised to announce punishments against Russia related to its state-backed doping program.

Three years earlier, Russia had targeted antidoping officials at the Rio de Janeiro Summer Olympics. According to indictments of several Russian military intelligence officers filed by the United States Department of Justice, operatives in that incident spoofed hotel Wi-Fi networks used by antidoping officials in Brazil to successfully penetrate their organization’s email networks and databases.

Ciaran Martin, who served as the first chief executive of Britain’s national cybersecurity center, said Russia’s past behavior made it “the most obvious disruptive threat” at the Paris Games. He said areas that might be targeted included event scheduling, public broadcasts and ticketing systems.

“Imagine if all athletes are there on time, but the system scanning iPhones at the gate has gone down,” said Mr. Martin, who is now a professor at the Blavatnik School of Government at the University of Oxford.

“Do you go through with a half-empty stadium, or do we delay?” he added. “Even being put in that position where you either have to delay it or have world-class athletes in the biggest event of their lives performing in front of a half-empty stadium — that’s absolutely a failure.”

Mr. Regul, the Paris cybersecurity head, declined to speculate about any specific nation that might target this summer’s Games. But he said organizers were preparing to counter methods specific to countries that represent a “strong cyberthreat.”

This year, Paris organizers have been conducting what they called “war games” in conjunction with the I.O.C. and partners like Atos, the Games’ official technology partner, to prepare for attacks. In those exercises, so-called ethical hackers are hired to attack systems in place for the Games, and “bug bounties” are offered to those who discover vulnerabilities.

Hackers have previously targeted sports organizations with malicious emails, fictional personas, stolen passwords and malware. Since last year, new hires at the Paris organizing committee have undergone training to spot phishing scams.

“Not everyone is good,” Mr. Regul said.

In at least one case, a Games staff member paid an invoice to an account after receiving an email impersonating another committee official. Cybersecurity staff members also discovered an email account that had attempted to impersonate the one assigned to the Paris 2024 chief, Tony Estanguet.

Millions more attempts are coming. Cyberattacks have typically been “weapons of mass irritation rather than weapons of mass destruction,” said Mr. Martin, the former British cybersecurity official.

“At their worst,” he said, “they’ve been weapons of mass disruption.”

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'Bad at almost everything': AI wearable panned by reviewers

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A new AI-fuelled gadget has fallen foul of the tech world’s expectations.

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Microsoft Makes High-Stakes Play in Tech Cold War With Emirati A.I. Deal

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Microsoft on Tuesday plans to announce a $1.5 billion investment in G42, an artificial intelligence giant in the United Arab Emirates, in a deal largely orchestrated by the Biden administration to box out China as Washington and Beijing battle over who will exercise technological influence in the Gulf region and beyond.

Under the partnership, Microsoft will give G42 permission to sell Microsoft services that use powerful A.I. chips, which are used to train and fine-tune generative A.I. models. In return, G42, which has been under scrutiny by Washington for its ties to China, will use Microsoft’s cloud services and accede to a security arrangement negotiated in detailed conversations with the U.S. government. It places a series of protections on the A.I. products shared with G42 and includes an agreement to strip Chinese gear out of G42’s operations, among other steps.

“When it comes to emerging technology, you cannot be both in China’s camp and our camp,” said Gina Raimondo, the Commerce Secretary, who traveled twice to the U.A.E. to talk about security arrangements for this and other partnerships.

The accord is highly unusual, Brad Smith, Microsoft’s president, said in an interview, reflecting the U.S. government’s extraordinary concern about protecting the intellectual property behind A.I. programs.

“The U.S. is quite naturally concerned that the most important technology is guarded by a trusted U.S. company,” said Mr. Smith, who will take a seat on G42’s board.

The investment could help the United States push back against China’s rising influence in the Gulf region. If the moves succeed, G42 would be brought into the U.S. fold and pare back its ties with China. The deal could also become a model for how U.S. firms leverage their technological leadership in A.I. to lure countries away from Chinese tech, while reaping huge financial awards.

But the matter is sensitive, as U.S. officials have raised questions about G42. This year, a congressional committee wrote a letter urging the Commerce Department to look into whether G42 should be put under trade restrictions for its ties to China, which include partnerships with Chinese firms and employees who came from government-connected companies.

In an interview, Ms. Raimondo, who has been at the center of an effort to prevent China from obtaining the most advanced semiconductors and the equipment to make them, said the agreement “does not authorize the transfer of artificial intelligence, or A.I. models, or GPUs” — the processors needed to develop A.I. applications — and “assures those technologies can be safely developed, protected and deployed.”

While the U.A.E. and United States did not sign a separate accord, Ms. Raimondo said, “We have been extensively briefed and we are comfortable that this agreement is consistent with our values.”

In a statement, Peng Xiao, the group chief executive of G42, said that “through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge A.I. technologies at scale.”

The United States and China have been racing to exert technological influence in the Gulf, where hundreds of billions of dollars are up for grabs and major investors, including Saudi Arabia, are expected to spend billions on the technology. In the rush to diversify away from oil, many leaders in the region have set their sights on A.I. — and have been happy to play the United States and China off each other.

Although the U.A.E. is an important U.S. diplomatic and intelligence partner, and one of the largest buyers of American weapons, it has increasingly expanded its military and economic ties with China. A portion of its domestic surveillance system is built on Chinese technology and its telecommunications work on hardware from Huawei, a Chinese supplier. That has fed the worries of U.S. officials, who often visit the Persian Gulf nation to discuss security issues.

But U.S. officials are also concerned that the spread of powerful A.I. technology critical to national security could eventually be used by China or by Chinese government-linked engineers, if not sufficiently guarded. Last month, a U.S. cybersecurity review board sharply criticized Microsoft over a hack in which Chinese attackers gained access to data from top officials. Any major leak — for instance, by G42 selling Microsoft A.I. solutions to companies set up in the region by China — would go against Biden administration policies that have sought to limit China’s access to the cutting-edge technology.

“This is among the most advanced technology that the U.S. possesses,” said Gregory Allen, a researcher at the Center for Strategic and International Studies and a former U.S. defense official who worked on A.I. “There should be very strategic rationale for offshoring it anywhere.”

For Microsoft, a deal with G42 offers potential access to huge Emirati wealth. The company, whose chairman is Sheikh Tahnoon bin Zayed, the Emirates’ national security adviser and the younger brother of the country’s ruler, is a core part of the U.A.E.’s efforts to become a major A.I. player.

Despite a name whimsically drawn from “The Hitchhiker’s Guide to the Galaxy,” in which the answer to the “ultimate question of life” is 42, G42 is deeply embedded in the Emirati security state. It specializes in A.I. and recently worked to build an Arabic chatbot, called Jais.

G42 is also focused on biotechnology and surveillance. Several of its executives, including Mr. Xiao, were associated with a company called DarkMatter, an Emirati cyber-intelligence and hacking firm that employs former spies.

In its letter this year, the bipartisan House Select Committee on the Chinese Communist Party said Mr. Xiao was connected to an expansive network of companies that “materially support” the Chinese military’s technological advancement.

The origins of Tuesday’s accord go back to White House meetings last year, when top national security aides raised the question with tech executives of how to encourage business arrangements that would deepen U.S. ties to firms around the world, especially those China is also interested in.

Under the agreement, G42 will cease using Huawei telecom equipment, which the United States fears could provide a backdoor for the Chinese intelligence agencies. The accord further commits G42 to seeking permission before it shares its technologies with other governments or militaries and prohibits it from using the technology for surveillance. Microsoft will also have the power to audit G42’s use of its technology.

G42 would get use of A.I. computing power in Microsoft’s data center in the U.A.E., sensitive technology that cannot be sold in the country without an export license. Access to the computing power would likely give G42 a competitive edge in the region. A second phase of the deal, which could prove even more controversial and has not yet been negotiated, could transfer some of Microsoft’s A.I. technology to G42.

American intelligence officials have raised concerns about G42’s relationship to China in a series of classified assessments, The New York Times previously reported. Biden administration officials have also pushed their Emirati counterparts to cut the company’s ties to China. Some officials believe the U.S. pressure campaign has yielded some results, but remain concerned about less overt ties between G42 and China.

One G42 executive previously worked at the Chinese A.I. surveillance company Yitu, which has extensive ties to China’s security services and runs facial-recognition powered monitoring across the country. The company has also had ties to a Chinese genetics giant, BGI, whose subsidiaries were placed on a blacklist by the Biden administration last year. Mr. Xiao also led a firm that was involved in 2019 in starting and operating a social media app, ToTok, that U.S. intelligence agencies said was an Emirati spy tool used to harvest user data.

In recent months, G42 has agreed to walk back some of its China ties, including divesting a stake it took in TikTok owner ByteDance and pulling out Huawei technology from its operations, according to U.S. officials.

Edward Wong contributed reporting.

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