Report: Intel in Rio Rancho could benefit from new chips deal with federal government

Intel Corp. will produce chips for the U.S. Department of Defense, the company announced earlier this month, which will greatly boost production for the chip manufacturer as it works through a restructuring that will lay off some 15,000 employees by the end of this year.

It isn’t clear if the new contract with the federal government, which will provide $3 billion in direct funding to Intel, will have an impact on the company’s Rio Rancho operations — which have greatly expanded this year with the opening of its Fab 9 factory, the site of Intel’s 3D advanced packaging technology.

In a news release announcing the funding, Intel said it is “advancing critical semiconductor manufacturing and research and development projects at its sites in Arizona, New Mexico, Ohio and Oregon.”

A report from Bloomberg, which was the first to announce the contract, said the company is “still negotiating the terms of that broader incentive package, which is intended to support facilities in Arizona, Ohio, New Mexico and Oregon.”

A spokesperson for the company declined to comment on how the new award will affect its New Mexico operations, saying it is “not sharing anything other than what’s in the press release.”

The new award would see Intel produce chips for the federal government through the Secure Enclave program, ensuring access to a domestic supply chain of chips for national security, according to the Department of Defense.

If New Mexico’s Intel operations are to get a boost thanks to this new direct funding, which Intel said is coming through the CHIPS and Science Act, that could amount to a big win for the local economy.

Earlier this year, the company in an agreement with the Biden-Harris Administration secured $8.5 billion in direct funding from CHIPS and another $11 billion in loans to shore up chip manufacturing in the U.S. — money expected to go toward recent advancements in Rio Rancho, the site of Intel’s Fab 9 factory where it packages chips.

The company in a fact sheet has also said it is upgrading Fabs 11 and 11X in Rio Rancho.

Intel is a large employer in the state. A Local Economic Development Act agreement with the state, City of Rio Rancho and Sandoval County shows the company employed more than 3,000 employees at its Rio Rancho site in the second quarter of 2024.

While Intel plans to cut jobs across the board, it’s unclear if those cuts will impact New Mexico operations.

In announcing the new deal with the Department of Defense, Intel’s CEO Pat Gelsinger wrote to employees about another deal it has with Amazon Web Services Inc. to produce custom chip designs under a multi-year, multi-billion-dollar framework.

“This program is designed to expand the trusted manufacturing of leading-edge semiconductors for the U.S. government. As the only American company that both designs and manufactures leading-edge logic chips, we will help secure the domestic chip supply chain,” Gelsinger wrote.

“This news, combined with our AWS announcement, demonstrates the continued progress we are making to build a world-class foundry business.”