Intel CEO Patrick Gelsinger speaks prior to President Joe Biden’s remarks at Intel Ocotillo Campus on March 20, 2024 in Chandler, Arizona.
Rebecca Noble | Getty Images
Chipmaker Intel and the CHIPS and Science Act office are close to finalizing a deal which would award the company a roughly $8 billion grant, according to a person familiar with the matter, as the Biden administration moves to dole out funds before President-elect Donald Trump’s inauguration.
That $8 billion will go toward Intel’s factory-building efforts, the person said. The Commerce Department is expected to finalize the award in the coming weeks, said the person, who spoke on condition of anonymity to discuss nonpublic information.
Intel is also in line for a $3 billion contract to manufacture chips for the Department of Defense, a deal announced in September and a rare bright spot in the company’s struggling efforts to grow its fab business. The Commerce Department and Intel declined to comment on the matter.
The Wall Street Journal first reported that the two sides were close to finalizing the grant.
But Intel’s struggles have intensified since the grant was initially announced. The New York Times, citing four people familiar with the matter, reported Sunday that the government had decided to decrease the grant by roughly $500 million due to uncertainties about Intel’s ability to execute on its investment commitment, and because of Intel’s shifting technology road map and customer demand.
The U.S. awarded Taiwan Semiconductor Manufacturing Co. a $6.6 billion grant earlier this month, raising investor expectations that cash funding for Intel would come soon. Intel has benefited from CHIPS tax breaks but has not yet received cash awards, something which Intel CEO Pat Gelsinger has expressed dissatisfaction with.
“We’re frustrated that hasn’t moved faster,” Gelsinger told CNBC in October, referring to the CHIPS grants. “They’ve been too bureaucratic in that process. We’re anxious to see those finished.”
U.S. House Speaker Mike Johnson, R-La., had previously said he might look to repeal the bipartisan legislation, but he then walked back those comments. The Biden administration and grant awardees have touted the legislation as a job-creating machine.
Intel’s struggles have increased significantly this year. The company posted a nearly $17 billion loss last quarter and has been dialing back Gelsinger’s ambitious plans worldwide.
Intel announced earlier this year it would trim 15,000 jobs via layoffs and voluntary buyouts. It has made moves to make its foundry business more easily separable from its legacy business, and has been working with advisors on activist defense and a broader strategic review, people familiar with the matter previously said. Intel is also seeking to raise cash via a minority stake in the Altera business, CNBC previously reported, and has been sounding out interested acquirers for weeks.
It may also be staring down a once unthinkable prospect: a potential takeover bid from an ascending Qualcomm, which has a market cap that now dwarfs Intel’s.
