[News] Intel Rumored to See Chip Grant Reduce to under USD 8 Billion following Delayed Investments

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After finalizing the USD 6.6 billion chips award to TSMC and USD 1.5 billion to GlobalFoundries lately, the Biden administration now reportedly mulls to reduce Intel’s initial USD 8.5 billion federal CHIPS grant following delays in the company’s investments and ongoing business challenges, according to The New York Times.

Citing several sources familiar with the matter, the report discloses that Intel is likely to see its grant reduced to under USD 8 billion.

In addition, the change reportedly reflects a USD 3 billion contract Intel has been offered to produce chips for the U.S. military.

Still, Intel’s case would represent the largest single subsidy package under the Chips and Science Act, which aims to strengthen domestic chip production and reduce dependence on Asian supply chains. With both the military contract and the CHIPS Act grant, Intel’s total award from the bipartisan bill exceeds USD 10 billion, the report adds.

As Intel struggles to cut costs amid business headwinds, it announced in early August that it would cut approximately 15% of its workforce and suspend dividend payments starting in the fourth quarter. The layoff plan is part of Intel’s broader effort to implement a USD 10 billion cost restructuring.

Moreover, the company also postpones several of its planned investments globally, including the project in Ohio. The completion of the project has been delayed to the end of the decade instead of 2025, according to the New York Times report.

The Commerce Department had originally granted the funding to support Intel’s expansion in Arizona, New Mexico, and Oregon, as well as the construction of two plants in Ohio, according to Intel’s press release. In addition to the direct grant, Intel as been offered up to USD 11 billion in federal loans and a 25% tax credit for Intel’s investments in new factories.

The report further notes that the Biden administration’s move may also take Intel’s technology roadmap and customer demand into consideration. While Intel has been working to enhance its technological capabilities to compete with rivals like TSMC, it has struggled to convince customers that it can match the foundry giant’s advanced technology.

Currently, Intel remains a crucial customer to TSMC, as it reportedly plans to scale up its outsourcing efforts by handing over to TSMC more 3nm orders for its upcoming Lunar Lake and Arrow Lake chipsets in 2025, according to a previous report by Commercial Times.

Read more

• [News] Intel Impresses the Market with Upbeat Q4 Guidance; 18A to Begin High-Volume Production in 2H25
• [News] Intel Reportedly to Outsource More Arrow Lake Orders to be Manufactured by TSMC’s 3nm

(Photo credit: Intel)