Subhi Agrawal
According to Business Times, Intel has qualified for up to $3.5 billion in federal grants to produce semiconductors for the Pentagon. This comes after the chipmaker reached a binding agreement with U.S. officials.
Aims To Establish Production Of Advanced Chips
As per Bloomberg reports, The secretive program, known as Secure Enclave, aims to establish production of advanced chips for military and intelligence purposes. It operates across multiple states, including a manufacturing facility in Arizona.
Although Intel has been the leading contender for this award, there has been resistance from other chipmakers, along with concerns in Washington about the risks of relying on a single firm. Additionally, funding disputes across multiple agencies and Capitol Hill threatened to reduce Intel’s total grant.
The funding could be announced as early as next week, according to sources of Business Times. This would be in addition to the potential $8.5 billion in grants and $11 billion in loans that Intel received in March under the Chips and Science Act, a law signed by President Joe Biden in 2022 to boost U.S. semiconductor manufacturing and reduce dependency on Asia.
Intel is still negotiating the terms of the broader incentive package, which is designed to support facilities in Arizona, Ohio, New Mexico, and Oregon. Similar to other Chips Act recipients, Intel has not yet received any funds, and its award remains preliminary. The Secure Enclave funding also comes from the Chips Act grant program, overseen by the Commerce Department, following an earlier dispute over agency responsibility.
However, this funding was managed outside the typical application process. Intel, the Commerce Department, and the Pentagon declined to comment, while the White House has not yet responded.
More Likely To Delay Or Halt Projects
Last month, Intel issued a disappointing earnings report and revenue forecast, leading to a sharp drop in its stock price and shaking confidence in CEO Pat Gelsinger’s ambitious turnaround plan.
While no final decisions have been made, Intel is more likely to delay or halt projects outside the U.S. than its key sites in Arizona and Ohio, Business Times sources familiar with the situation stated.
The exact models of chips Intel will manufacture for the Pentagon remain unknown. Despite having both design and manufacturing capabilities, the Santa Clara-based company continues to rely on TSMC for some of its most advanced processors.
Intel announced that other companies, such as Microsoft, are considering using Intel to produce their chip designs. However, these discussions have not yet led to large orders or generated significant revenue.
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