The Impact of the CHIPS Act on Intel’s Manufacturing Capacity and National Security Implications for the Department of Defense

Abstract

The United States remains heavily dependent on foreign sources for advanced semiconductors (SCs), posing national security risks. This thesis examines how the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act addresses vulnerabilities by promoting domestic production, focusing on Intel’s strategic response. It analyzes Intel’s integrated device manufacturing (IDM) 2.0 strategy, its efforts to expand U.S.-based fabrication, and challenges in achieving high-volume, leading-edge manufacturing for external customers. The study uses policy analysis, industry reports, and case comparisons to assess Intel’s role in reducing foreign reliance. Findings show that Intel’s expansion—supported by federal incentives—improves resilience, but U.S. capacity remains insufficient to meet domestic demand. Complete independence is unrealistic due to reliance on global supply chains for rare earth elements, back-end processing, and critical minerals. The research highlights China’s influence on the global value chain and risks from geopolitical tensions. It recommends sustained government investment, workforce development, and international cooperation to strengthen security and competitiveness. This thesis informs U.S. SC policy by mapping vulnerabilities and offering policy paths to reinforce defense-related technology supply chains.