Intel's $8.5 Billion CHIPS Act Grant Delayed
According to a report by Tom's Hardware, the U.S. Department of Commerce has delayed the $8.5 billion grant promised to Intel under the CHIPS and Science Act. This delay is due to stringent reviews aimed at ensuring taxpayer funds are allocated responsibly. Intel is the largest beneficiary of the Biden administration's efforts to revitalize the U.S. semiconductor industry, with the government committing in March to provide $8.5 billion in direct subsidies, $11 billion in low-interest loans, and up to $100 billion in tax credits.
However, Intel faces significant challenges in accessing these funds due to a series of strict conditions. The company's current financial struggles and plans for significant cost reductions have raised concerns in Washington about its ability to meet its commitments. In the second quarter of 2024, Intel reported a staggering $1.65 billion loss, driven by underperformance in its data center and foundry businesses. The company also announced a 15% reduction in its global workforce, impacting over 15,000 employees, along with a $10 billion cut in capital expenditures, leading to a sharp drop in stock prices.
As a result of the stock decline, investors lost more than $32 billion overnight, and Intel now faces the possibility of being removed from the Dow Jones Industrial Average. Shareholders have already initiated legal action, alleging the company concealed critical information, which led to losses for those who purchased stock during the price surge from January 25 to August 1.
To address its financial challenges, Intel is rumored to be considering several strategic options, including divesting its foundry business, halting construction of its German facility, and potentially selling its FPGA division (Altera). Despite these hurdles, Intel has emphasized its significant investments in the U.S. and has provided assurances on its roadmap for advanced capacity expansion. The company is keen to finalize the agreement and secure the first installment of the funding as soon as possible.
