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US Plans to reduce 8.5Billion Chip Grant for Intel

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siliconbruh999

Well-known member
Nov 24 (Reuters) - The U.S. government plans to reduce Intel Corp's (INTC.O) preliminary $8.5 billion federal chips grant to less than $8 billion, the New York Times reported on Sunday citing unnamed sources.

The change took into account a $3 billion contract Intel had been offered to make chips for the Pentagon, the people told the Times.

This spring U.S. President Joe Biden's administration said it was awarding Intel nearly $20 billion in grants and loans, supercharging the company's domestic semiconductor chip output and marking the government's largest outlay to subsidize leading-edge chip production.

The U.S. announced a preliminary agreement for $8.5 billion in grants and up to $11 billion in loans for Intel in Arizona, with some of the funding to be used to build two new factories and modernize an existing one.

The outlay was part of the 2022 CHIPS and Science Act, a bid to boost domestic semiconductor output with $52.7 billion in funding, including $39 billion in subsidies for semiconductor production and $11 billion for research and development.

 
Not sure why Pat would publicly criticize the funding status of the ChipAct. Intel doesn't have the luxury to bargain.
 
I don't think it's the criticism it's the Extra $3B goverment gave alongside 8.5B and 11B that is causing this and who knows what is going on with Intel and Goverment
 
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In my experience governments never dispense money on time. It always takes them forever to get you the money.

Intel also has deployed most of its fabrication with the new processes in their Irish fab, so it is kind of hard to justify it as new US fab capacity. The large Intel US fabs are still being built. Their only operational leading edge US fab is the one prototyping 18A. Since the funding was based on actual physical fabrication you get this government hesitation. But of all the companies the state is funding doing leading edge logic Intel is the only one which has its process development team in the US.
 
Arizona and Ohiho both are American states even if one is favoured over another it's still in America as for busting DOC I don't really know what is going on with them
If i knew i would apply for Secretary of Commerce 🤣
 
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Seems like the DoC is getting closer to the final grant and milestones, and that the paypoints are being adjusted to the final deliverables.

”The change in terms takes into account a $3 billion contract that Intel has been offered to produce chips for the U.S. military, two of these people said.”

“To prevent taxpayer money from being wasted, Commerce Department officials set milestones for the companies to meet in order to get funds. The benchmarks included building a plant, producing chips and signing up customers to buy domestically produced products.”
 
Daniel Nenni said:
Do you think Pat Gelsinger regrets busting the DoC for not releasing money to Intel on time?

Is Intel reducing AZ investment in favor of Ohio?
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In reality, Intel already reduced its investment at those two new fabs in Arizona from $30 billion to about $15 billion by offloading rest of that to Brookfield Asset Management. The deal was signed in August 2022.

Because Brookfield Asset Management got guaranteed profit from that contract, it may make the government subsidy consideration for those two Intel Arizona fabs more complicated. For example, is government's incentive going to become part of the guaranteed profit for Brookfield?
 
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siliconbruh999 said:

it is $7.9 Billion in grant they refused the loans
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Could it be because loans prevent them from buying back shares? Given the current share levels, they should consider initiating buybacks once their financial condition improves, to fend off potential suitors like Qualcomm.

Additionally, it is likely that interest rates will decrease, potentially allowing them to secure better terms in the near future.
 
XYang2023 said:
Could it be because loans prevent them from buying back shares? Given the current share levels, they should consider initiating buybacks once their financial condition improves, to fend off potential suitors like Qualcomm.

Additionally, it is likely that interest rates will decrease, potentially allowing them to secure better terms in the near future.
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Nope the condition for subsides is no share buy back for 5 years so it is done deal might have also added no dividends in the contract somewhere
 
XYang2023 said:
"I need less people at headquarters, more people in the field, supporting customers," CEO Pat Gelsinger told Reuters in an interview, talking about the job cuts. On the dividend suspension, he said: "Our objective is to ... pay a competitive dividend over time, but right now, focusing on the balance sheet, deleveraging."

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I mean even if he is against Dividends he can't say that lol
 
siliconbruh999 said:
I mean even if he is against Dividends he can't say that lol
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One of his job requirements is to monitor stock prices. Based on both absolute and relative measures, the performance is currently unsatisfactory. As mentioned earlier, it is important to fend off potential suitors.

He should consider utilizing dividends once conditions improve.
 
Daniel Nenni said:

Biden-Harris Administration Announces CHIPS Incentives Award with Intel to Advance U.S. Leading-Edge Chip Capacity and Create Tens of Thousands of Job

CHIPS Investment of up to $7.865 Billion Reinforces U.S. Supply Chain Security and Supports Multiple Projects in Arizona, New Mexico, Ohio, and Oregon Today, the Biden-Harris Administration announced that the U.S. Department of Commerce awarded Intel Corporation up to $7.865 billion in direct...
semiwiki.com
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Yup - as I suspected. Prior news about reduced amount surfaced because the award was imminent. Nice work DoC.
 
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