The Chips Act Moral Hazard: Intel's Local Subsidy Scandal

OPINION: The current era of industrial policy, epitomized by the CHIPS Act, is creating a dangerous moral hazard. When corporate growth is decoupled from public utility, the result is a system where semiconductor giants are subsidized not for creating new value, but for maintaining existing operations at the expense of the communities that house them.

As The Register first reported, a scathing report by the non-profit Good Jobs First titled "The Bleeding Edge: How the Public Pays the Costs of Intel’s Semiconductor Manufacturing" highlights this trend. The organization argues that Intel has secured massive tax breaks for established facilities in Oregon and New Mexico, despite the company laying off more than 4,700 workers at those specific sites over the last three years amid restructuring and financial losses.

According to The Register, the report finds that property tax breaks have cost these communities more than $1.2 billion in lost revenue starting in 2015. The impact is felt most acutely in education:

* **Oregon:** Using the Strategic Investment Program (SIP), Intel received at least $1.14 billion in exemptions. Between 2017 and 2025, schools in Hillsboro lost $891 million in revenue. During this period, Intel paid Oregon $552.4 million in fees, which is less than one-third of the value of the tax breaks. * **New Mexico:** Through Industrial Revenue Bonds (IRBs), the company received $99.6 million in property tax exemptions since 2017. Rio Rancho’s Public Schools lost an estimated $43.4 million from 2017 through 2025, while Intel provided $41.6 million in payments in lieu of taxes to local governments.

Kristan Wong Karinen, a Research Analyst at Good Jobs First and author of the report, told The Register that tax incentives should encourage investment rather than providing a decades-long stream of public support. Wong Karinen specifically questioned the necessity of these local subsidies given the billions in federal support Intel has secured via the CHIPS Act.

That federal support has shifted in structure across administrations. The Register reports that under the Biden administration, Intel secured an initial $7.86 billion, with approximately $2.2 billion paid out. The incoming Trump administration restructured this into an arrangement where Intel exchanged 10 percent of its common stock for $8.9 billion. This new arrangement consists of the remaining $5.7 billion from the CHIPS Act and $3.2 billion from the Secure Enclave program for military semiconductor production.

Good Jobs First argues that because these sites are decades-old facilities with existing infrastructure and skilled labor, the subsidies are not driving new growth but are instead funding business decisions Intel would likely make regardless.

When asked for comment by The Register, Intel stated that it works with regional governments to utilize incentives supporting leading-edge manufacturing and R&D, adding that it would not provide details beyond what is in its annual reports.