Intel Set to Finally Get Their $8bln Chip Act Money (How to Lose Market Share and Get Paid for It)

“Soooo you’re telling me there’s a chance?”

After months of blue balls absolutely nothing, word on the street is that Intel and the CHIPS Act Office are this close to finalizing an $8 billion deal to help fund its factory-building ambitions. You can practically hear the scrambling of President Biden’s administration shuffling through papers and government budgets to make sure this happens before January 20th. You know, to mark at least one massive accomplishment in the W column before their tenure is over. 

(Source: Giphy) 

In short, as we’ve all known, the money is earmarked for factory construction, including two plants in Ohio that were, at one point, supposed to be operational by 2025. Spoiler alert: That timeline has now been punted all the way to the end of the decade. Classic.

(Source: CNBC) 

And to do so, the government is knocking half a billion bucks off the original $8.5 billion grant. Why? Well, it seems Uncle Sam isn’t too thrilled about Intel’s “investment delays” and its inability to stick to its tech roadmap. Turns out, when you promise shiny new chip plants and then proceed to drag your feet, people start asking questions. Who knew? 

But still, once this comes through, Intel still looks to be sitting pretty as they’re also getting a $3 billion contract from the Department of Defense to make chips for the military. That’s on top of the CHIPS Act tax breaks they’ve already enjoyed. However, while you’d think this would be followed with some yacht parties and spontaneous trips to the “club”, Intel CEO Pat Gelsinger isn’t too thrilled about any of it. In October, he vented his frustrations to CNBC, calling the CHIPS Act process “too bureaucratic” and lamenting how slow the cash has been to roll in.

(Source: Yahoo Finance) 

Which to be fair, he’s not wrong. For context, the U.S. recently awarded Taiwan Semiconductor Manufacturing Company (TSMC) a $6.6 billion grant. That raised eyebrows—and expectations—that Intel’s payout was imminent. BUUUT, unlike TSMC, Intel hasn’t necessarily lit the world on fire in 2024. They’ve experienced massive amounts of criticism, a delisting from the Dow, and fears that their once-undisputed champ of chips status was headed for 6 ft under ground. 

For instance, the company posted a $17 billion loss last quarter (its worst in 56 years), announced plans to slash 15,000 jobs, and is reportedly considering selling a minority stake in its Altera business just to raise cash. Hell, the only good news they’ve had over the last few months is that Qualcomm, Apple, among others have thought about acquiring the company. 

Meaning, when it comes to Intel, they’ve no doubt been a headache for the Biden administration, which has been touting the CHIPS Act as a cornerstone of its economic and national security agenda. The legislation, if you recall, passed in 2022, set aside $52.7 billion to boost domestic chip manufacturing. Intel was supposed to be the poster child for this effort. But, as we’ve seen, their dominance has been completely pulled out from under them.

(Source: Giphy) 

But, but, but… still, it looks like Intel may finally be getting a boatload of taxpayer money, just not as much as they were hoping for. Between the $8 billion CHIPS grant, the $3 billion Pentagon contract, and additional federal loans, the company’s total haul under the CHIPS Act exceeds $10 billion. But with mounting financial struggles, shrinking market share, and a reputation for overpromising and under delivering, the question isn’t whether Intel will cash the checks—it’s whether it can actually deliver on them. 

For now, the Commerce Department is racing to finalize CHIPS Act contracts, with Intel’s deal expected to close in the coming weeks. Whether that’s enough to pull the chipmaker out of the gaping hole it’s dug itself is anyone's guess. But one thing’s for sure: If Intel doesn’t get its act together soon, this $8 billion might end up being the most expensive friggin ‘Band-Aid in semiconductor history.

In the meantime, you know the drill: Keep an eye on Intel if this deal comes through. And as always, stay safe and stay frosty, friends! Until next time…

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Stocks.News holds positions in Apple and Intel as mentioned in the article.