Intel Receives Practically $eight Billion in CHIPS Act Grant: Supply

Intel CEO Patrick Gelsinger speaks before President Joe Biden's remarks at the Intel Ocotillo Campus on March 20, 2024 in Chandler, Arizona.

Rebecca Noble | Getty Images

chip manufacturer Intel According to a person familiar with the matter, the CHIPS and Science Act offices are close to finalizing an agreement that would give the company a grant of about $8 billion as the Biden administration approaches the inauguration of the president-elect Donald Trump wants to distribute money.

That $8 billion would go toward building Intel's factories, the person said. The Commerce Department is expected to complete the award in the coming weeks, said the person, who spoke on condition of anonymity to discuss nonpublic information.

Intel is also facing a $3 billion contract to make chips for the Defense Department, a deal announced in September and a rare bright spot in the company's struggling efforts to expand its fab business. The Commerce Department and Intel declined to comment on the matter.

The Wall Street Journal initially reported that both sides were close to finalizing the grant.

But Intel's problems have worsened since the grant was first announced. The New York Times reported on Sunday, citing four people familiar with the matter, that the government decided to cut the subsidy by about $500 million because of uncertainties about Intel's ability to implement its investment commitments and because Intel's technology roadmap is changing customer demand.

Awarded by the USA Taiwan Semiconductor Manufacturing Co. A $6.6 billion grant was awarded earlier this month, raising expectations among investors that cash funding for Intel would come soon. Intel has benefited from the CHIPS tax breaks but has not yet received any cash bonuses, something Intel CEO Pat Gelsinger has expressed dissatisfaction with.

“We're frustrated that we haven't moved faster,” Gelsinger told CNBC in October, referring to the CHIPS grants. “They were too bureaucratic in this process. We can’t wait for these to be completed.”

U.S. House Speaker Mike Johnson, R-La., had previously said he might consider repealing the bipartisan law but then walked back those comments. The Biden administration and grant recipients have touted the legislation as a job creation machine.

Intel's problems have increased significantly this year. The company posted a loss of nearly $17 billion in its most recent quarter and has scaled back Gelsinger's ambitious plans globally.

Intel announced earlier this year that it would cut 15,000 jobs through layoffs and voluntary buyouts. The company has taken steps to more easily separate its foundry business from its legacy business and has been working with advisers on the activists' defense and a broader strategic review, people familiar with the matter previously said. As CNBC previously reported, Intel is also trying to raise money through a minority stake in the Altera business and has been exploring interested buyers for weeks.

It could also be a once unthinkable prospect: a possible takeover offer from an up-and-coming company Qualcommwhose market capitalization now dwarfs that of Intel.

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