09:05 AM EDT, 03/20/2024 (MT Newswires) -- Intel ( INTC ) on Wednesday agreed to non-binding preliminary terms with the US government to receive a total of roughly $19.5 billion in grants and loans, as the chipmaker looks to advance its commercial semiconductor projects across four states.

The US Department of Commerce is set to give $8.5 billion in direct funding to the company under the CHIPS and Science Act, which was passed in 2022 to boost the country's semiconductor manufacturing and research and development capabilities. Intel ( INTC ) said the funding will help support the building and development of its facilities in Arizona, New Mexico, Ohio and Oregon.

The chip giant also has the option to tap into federal loans of up to $11 billion under the terms of the agreement. It also plans to claim the Treasury Department's investment tax credit of up to 25% on more than $100 billion in qualified investments over five years.

The government funding and loans require due diligence and a negotiation of a term sheet, and is contingent on the achievement of certain milestones and availability of funds, according to Intel ( INTC ). The company's shares gained 2.7% in premarket trading.

"Today is a defining moment for the US and Intel ( INTC ) as we work to power the next great chapter of American semiconductor innovation," Chief Executive Pat Gelsinger said in a statement. "CHIPS Act support will help to ensure that Intel ( INTC ) and the US stay at the forefront of the (artificial intelligence) era as we build a resilient and sustainable semiconductor supply chain to power our nation's future."

The construction and expansion of the facilities in the four states are expected to create nearly 30,000 jobs, including 20,000 construction roles and 10,000 permanent company positions, Intel ( INTC ) said. The move is also anticipated to support more than 50,000 indirect jobs with suppliers and supporting industries.

"With this agreement, we are helping to incentivize over $100 billion in investments from Intel ( INTC ) -- marking one of the largest investments ever in US semiconductor manufacturing," Secretary of Commerce Gina Raimondo said. "This announcement is the culmination of years of work by President (Joe) Biden and bipartisan efforts in Congress to ensure that the leading-edge chips we need to secure our economic and national security are made in the US."

In January 2022, Intel ( INTC ) said it plans to invest more than $20 billion to build two chip factories in Ohio, with a potential for the total investment in the project to expand to as much as $100 billion over the next 10 years. Last week, media reported that Intel's ( INTC ) $3.5 billion grant under the CHIPS and Science Act is facing caveats as the Pentagon scrapped plans to provide its $2.5 billion share.

Price: 43.22, Change: +1.17, Percent Change: +2.78