In July, during the annual Sun Valley gathering of tech leaders and billionaires in Idaho, U.S. Commerce Secretary Gina Raimondo took a strategic spot near a duck pond to leverage her influence. Her objective was clear: to rally support for Intel, a struggling yet significant American chipmaker.

As media tycoons and business icons brokered deals around her, Ms. Raimondo met with executives from Microsoft, Google, and other companies, urging them to prioritize U.S.-sourced semiconductors, particularly from Intel. Highlighting the need for more domestic chip production, she emphasized Intel’s crucial role in this effort.

Over the past year, Ms. Raimondo has made similar appeals to various tech leaders, including those at Apple, Amazon, Nvidia, AMD, and Marvell Technology, suggesting they consider ordering Intel chips manufactured in the United States. These discussions, confirmed by several individuals with knowledge of the matter, underscore her broader initiative to bolster American-made semiconductors.

However, most firms have been hesitant to adopt Intel chips, largely due to the company’s less advanced manufacturing capabilities compared to Taiwan Semiconductor Manufacturing Co. (TSMC), their preferred supplier. This reluctance reflects Intel’s current struggles at a time when Ms. Raimondo aims to rejuvenate U.S. chip production. Her role as an unofficial “chip salesperson” highlights Intel’s central position in President Biden’s strategy to expand domestic semiconductor manufacturing.

The Biden administration’s chip initiatives include many companies, but Intel is pivotal, having lobbied successfully for the 2022 CHIPS Act. The company is the largest American-owned producer of advanced logic chips and a significant recipient of federal funding under the Act, which was designed to reduce U.S. dependence on Asia for essential electronic components.

Intel’s CEO, Patrick Gelsinger, has committed over $100 billion in investment, backed by more than $20 billion in government support, to expand operations in states like Arizona, Ohio, New Mexico, and Oregon. However, Intel’s recent financial challenges have raised concerns among policymakers and administration officials about its ability to deliver on these promises. In recent months, Intel announced 15,000 layoffs and postponed the opening of a large Ohio factory, a project previously highlighted by President Biden in his State of the Union addresses.

The ambitious government-backed efforts to support Intel illustrate the challenges of industrial policy in a rapidly evolving field. There are growing questions about whether the administration’s investment in Intel will yield the desired results or lead to ongoing financial strain.

Intel, once dominant in the personal computer chip market, has since lagged behind in producing chips for smartphones and artificial intelligence applications. As sales and stock prices decline, potential buyers have expressed interest in acquiring parts of the company.

The Biden administration, aware of the risks, has extended funding to 20 other chipmakers, both domestic and foreign. Officials remain optimistic, reporting significant gains in U.S. semiconductor jobs and factory investments since the CHIPS Act’s enactment, with over 115,000 new jobs and more progress in construction than the previous two decades combined. However, the recent slump in the chip industry has delayed projects from companies like Samsung and Micron Technology, both of which have postponed facilities planned in Texas and New York.

Ms. Raimondo has indicated that her efforts are not limited to Intel but are part of a broader initiative to support all U.S. manufacturers. “I’m doing everything I can to ensure Intel’s success,” she said, emphasizing the need for large firms like Apple, AMD, Nvidia, and Amazon to support American-made chips. She stressed that this initiative does not rely on one company alone.

To secure effective use of public funds, the administration has implemented milestone requirements for companies receiving subsidies. These benchmarks, such as plant construction, chip production, or client acquisition, must be met before funding is released.

Intel has yet to receive its first financial installment from the program. Ongoing negotiations between Intel and the government have led to delays, with Intel’s CEO expressing frustration over the lengthy process.

Ms. Raimondo’s relationship with Intel dates back to early 2021, during her first interactions with CEO Gelsinger over the global chip shortage, which significantly impacted U.S. manufacturing. Intel, having outsourced much of its chip production to Asia over the years, has been working to catch up with TSMC’s technology under Gelsinger’s leadership. In 2022, Congress passed the CHIPS Act, granting the Commerce Department $50 billion in funding, along with a substantial loan facility and tax credits for qualifying companies. Intel’s lobbyists celebrated the Act’s passage, marking a milestone in U.S. industrial policy.

Intel’s efforts to establish a new chip manufacturing plant have had setbacks, particularly with its Arizona site, which was built years before it was operational. This situation, coupled with uncertainty surrounding Intel’s ability to deliver, has led administration officials to consider alternative partners, even as they remain committed to supporting Intel.

In March 2024, Intel received $8.5 billion in grants and up to $11 billion in loans, along with eligibility for nearly $25 billion in tax credits. Yet, the company postponed its Ohio plant for two to three years, citing the need for additional clients to sustain its operations.

As Intel continues to navigate its financial difficulties, Ms. Raimondo remains hopeful about closing more deals to support American manufacturing. However, she is cautious about ensuring that taxpayer investments are protected, signaling that the government is determined not to fund projects that lack tangible progress.

For Intel, the road to recovery may be challenging, but the company is steadfast in its commitment to fulfill its part in reviving U.S. semiconductor manufacturing, backed by significant federal investments.