The Biden administration awarded Intel (INTC) $8.5 billion in US grants earlier this week as part of the CHIPS and Science Act. The chip company will utilize the funds to build out its proposed domestic semiconductor plants in the US.

Intel CEO Pat Gelsinger sits down with Yahoo Finance Executive Editor Brian Sozzi to discuss his meeting with President Biden and key cabinet members, and Intel's newfound ability to "become [more] economic" about its production and manufacturing scale coming out of the pandemic.

"Yes, indeed, it is a time to build more resilient, sustainable, and trusted supply chains for the digital future of the nation that is being supercharged by the AI era that we're in. Now it's time to make these moves, and this is a moment that I think really will be defining in that transitioning of the supply chains of the nation, as well as for intel," Gelsinger says. "We're doing what we said we would."

Gelsinger also comments on the increasing competition from semiconductor producers in Asia as the Biden administration's investments in capacity is expected to boost Intel's own market share.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO]

BRIAN SOZZI: Big moment in history for Intel receiving $8.5 in fresh funding from the government. Let's get right to Intel CEO Pat Gelsinger. Pat, good to see you. I understand this is a very big moment for your company and for you as a leader. This funding, What will it allow you to do?

PAT GELSINGER: Well, overall, as you think about this, we've been working on this rebuilding of the American supply chains in semiconductor. The challenge has been that, you know, we just weren't economic to build manufacturing in the US. There's been 30 years of industrial policy in Asia. And we've seen the entire industry drift to Asia as a result. So our supply chains became precarious. And we saw that through COVID in a very acute way for the entire industry and economy. And what this funding is about is rebalancing so that we can be competitive with our manufacturing investments in the US.

And that's what the CHIPS Act was all about, right. And yesterday was the day where it all came together. So we're so exciting to be in Arizona with the president, with Secretary Raimondo, these big grants coming forward and 8.5 billion of immediate grants, 11 billion of loan capacity, and about 25% of 100 billion investments, so 25 plus billion of investment tax credit as well. And putting that all together, that's $45 billion committed to the industrial policy of rebuilding the supply chains of the US. So we're quite excited about that. A super big day. And it will allow us to not only get our technology leadership back, but to be able to combine that with at scale manufacturing right here in the USA.

BRIAN SOZZI: Pat, these are really large numbers. Now you and I have talked in the past, and I think you've been maybe a little hesitant to say Intel is back. But when I see numbers and hear numbers like this and the plants you're building in this country, it sure sounds like Intel is back.

PAT GELSINGER: Well, thank you Sozzi. And, you know, I mean, obviously, we got to get the technology back. And we just had our Founder Day a couple of weeks ago where this five nodes and four years getting back to technology leadership coming together. We also have to get our product machine executing as well, where we're delivering the best products on that technology. And finally, you have to have the capacity. And this is really the third of those legs. And I just say it is coming together. To say we're finished, oh, I think that's very presumptive, to say that, hey, this engine is coming back to life.

There's a lot of evidence that that's the case, and I'm really excited about yesterday's event just to put a huge exclamation point on that with the president, their commitment, their partnership, and obviously, to the entire industry. Hey, we want to be your manufacturer at scale. And, you know, one of the lines I used yesterday, Sozzi, is Ohio, that is the AI foundry of the industry. Let's fill it, build it with the greatest AI chips, ours as well as the industry's. You know, this is a powerful moment for the nation.

BRIAN SOZZI: Pat, this is a powerful moment for Intel. You know, does it change-- You know, when the government says, we're going to back Intel in a very big way, does it change your sense of purpose, your sense of responsibility? This is a big rubber stamp of approval.

PAT GELSINGER: Well, I view it in both directions in that sense. And when I talk to Secretary Raimondo, she constantly reminds me, Pat, we're counting on you. We are betting on Intel for this. And then I immediately respond and say, Secretary Raimondo, you now have a sales quota for me. We have to work together, right, to bring the customers and to reassure the supply chains of the nation. So it's a huge statement of affirmation, of partnership and investment, but it also is I think a moment for the nation to sort of say, we have leading products, we have leading technology, and we're building capacity.

Yes, indeed, it is a time to build more resilient, sustainable, and trusted supply chains for the digital future of the nation that is being supercharged by the AI era that we're in. Now it's time to make these moves. And this is a moment that I think really will be defining in that transitioning of the supply chains of the nation, as well as for Intel. You know, We're doing what we said we would. And when we launched this effort, you know, three years ago, people said no way are they pulling it off. Well, the evidence is building, they're pulling it off. No way will we have this level of industrial policy supported by the nation. We're making that happen, and we're building these factories at scale.

This is good for the economy, good for the National Security. We're excited.

BRIAN SOZZI: A really stunning stat I came across, Pat, and this is from JP Morgan. They point out that East Asia manufacturers 75% of the world's chips. Now someone who spent really their whole career in this industry, number one, Why has this happened? And then two, How hard is it going to be to get market share back from those East Asia suppliers?

PAT GELSINGER: And, you know, when you look at those statistics, it's, you know, frightening. We invented this, and the president made that point very clearly in, you know, his comments yesterday. We invented semiconductors, and transistors, and everything that we're talking about. But 30 plus years of malaise in the US and industrial policy through the Asian countries has led this industry's manufacturing to move entirely to Asia. And that's a frightening statistic given how everything is going digital and we need semiconductors to support that digital revolution. And as we look at the policies that have been put in place, a lot of this is, hey, Are we going to measure a five year investment on 90-day shot clock? No way.

You have to have policies that are encouraging long-term significant capital investments. That's what the East Asian counterparts did. We need policies that are driving 10, 20, 30-year R&D cycles. That's what our East Asian counterparts have been doing. And by the way, that's what gave us this industry. You know, coming out of World War II, all of DARPA, and the industrial policy investments that were made created the semiconductor revolution. It's time for us to get it back. And that's why I say, you know, the capital policies, you know, the long-term tax policies, the R&D incentives that we need for long-term research, you know, and the creation of the talent pools taken together, yes, I believe this is a defining point to rebuild this industry for the future.

And I'm super happy that I and Intel have been able to play a part in that transformation.

BRIAN SOZZI: Pat, I'm just going to assume your company is taking market share over the next decade because of these factories you're opening up, but even still there is going to be a component of chips being made in Asia. As we push into AI, I mean to use your word frightening, Is it frightening that some of these chips will still be made in another country given the boom we are seeing in AI and given how fast it's moving?

PAT GELSINGER: Yeah. And our objective is not that 100% of these chips move back to the US. Our objective is balanced resilient supply chains. And if we get to my moonshot goal of 50% in US and Europe in a decade, you know, that is such a phenomenal outcome given that we're almost at 0% of the most leading edge chips today. And at that point, you get to say, oh, we really have rebalanced the supply chain for the world. And, you know, to us, you know, I expect that we will need a CHIPS 2 in the process as well, Sozzi. You know, so 30 years of bad policy does not get corrected in one 3-year act like the CHIPS Act. We'll need more sustainable policies to go forward.

But I do believe that shift has begun. Our factories and others are starting to be built here in the US, technologies are being researched. We have now engagement with every major AI chip activity and our packaging and foundry. So, you know, this is a great moment I think to see those swing back in the right direction. But the world to me is one where balanced resilient supply chains is the answer for the future. And we believe this is a moment that begins that progression.

BRIAN SOZZI: Some of that's been out pounding the pavement in DC and with various lawmakers in the past 2 and a 1/2, 3 years, Pat. What would a CHIPS Act to even look like?

PAT GELSINGER: You know, to me it's going to have some characteristics like CHIPS 1, but it needs to focus more on supply chain. You know, we need to bring the rest of the supply chain, the chemical suppliers, and systems components, you know, back to the US. It also needs to be more long-term research as well. We need to make sure that we're building the seed corn for two, three decades into the future. You know, we'll have to have components of workforce as we enable this. There will need to be sustained capital and tax policies that encourage long-term capital investments that we would, you know, have for the future.

But the best way that we can make sure chips to happen is to make sure CHIPS 1 is highly successful. And I think yesterday was a beginning point for that. But if we're going to go back to Congress and others and say, here's the long-term policies we need to put in place, you know, we need to make this successful. And my hope, Sozzi, would be, you know, that at that point, you know, after CHIPS 2 that the sustainability of the ecosystem that we've rebalanced the costs that we started to see that ecosystem emerge, because fundamentally this has to be commercially sustainable for the long term.

And I'd hope after, you know, 10 years or so of explicit industrial policy, we would see, you know, that positive spiral emerging that allows us to rebuild this industry that we lost over three decades of inaction and a decade or so of explicit and long-term policies. I think we have the chance to get it back.

BRIAN SOZZI: 15-20 years from now, hopefully, you and I are on a beach somewhere, Pat. I mean, it has to happen at some point. We can't keep going at this pace. Pat Gelsinger, always nice to see you. Thanks for making time for us. I know it's been a very busy 48 hours to say the very least. We'll talk to you soon.

PAT GELSINGER: Thank you so much, Sozzi. Bye, bye.