Intel, in collaboration with the CHIPS and Science Act office, has secured a $7.86 billion grant, as announced by the government on Tuesday. This move comes as the Biden administration aims to distribute funds before the presidential inauguration of Donald Trump.
The grant will be allocated towards Intel’s efforts in building factories, with the initial top line number being slightly lower than the previously announced $8.5 billion grant. Senior administration officials stated that this adjustment was due to Intel’s $3 billion contract with the Department of Defense, which was funded by the CHIPS Act.
The deal with the Department of Defense was a positive development for Intel, as the company has been facing challenges in expanding its fab business. Commerce Secretary Gina Raimondo expressed gratitude towards President Biden and Vice President Harris for their leadership in securing the CHIPS award, which will facilitate one of the most significant semiconductor manufacturing expansions in U.S. history.
Intel CEO Pat Gelsinger also highlighted the company’s commitment to advancing shared priorities and expanding U.S. operations in the coming years. CNBC previously reported that the finalization of the grant was imminent, and it has now come to fruition.
The announcement of the grant follows a $6.6 billion grant awarded to Taiwan Semiconductor Manufacturing Co. earlier this month, raising expectations among investors that Intel would soon receive similar funding. Gelsinger had previously expressed frustration with the slow pace of the CHIPS grants process, emphasizing the need for expediency.
However, Intel’s challenges have mounted in recent times, with reports indicating a decrease of approximately $500 million in the grant amount due to uncertainties about the company’s ability to execute investment commitments. Despite these setbacks, the Biden administration and grant awardees have highlighted the job-creating potential of the legislation.
Intel has been facing financial losses and restructuring efforts, including layoffs and strategic reviews to enhance its foundry business. The company’s struggles underscore the competitive landscape of the semiconductor industry and the evolving dynamics in the market.
As Intel navigates these challenges, the implications of the grant and its execution will be closely monitored by industry experts and stakeholders. The future developments in Intel’s operations and the broader semiconductor sector will be pivotal in shaping the industry landscape moving forward.
