Intel CEO Patrick Gelsinger speaks prior to President Joe Biden’s remarks at Intel Ocotillo Campus on March 20, 2024 in Chandler, Arizona.
Rebecca Noble | Getty Images
Chipmaker Intel and the CHIPS and Science Act office finalized a $7.86 billion grant, the government announced Tuesday, as the Biden administration moves to dole out funds before President-elect Donald Trump’s inauguration.
That $8 billion will go toward Intel’s factory-building efforts. The topline number is lower than the initially announced $8.5 billion grant, a haircut that senior administration officials said was because Intel’s $3 billion contract with the Department of Defense came from CHIPS Act funds.
That deal was announced in September, a rare bright spot in the company’s struggling efforts to grow its fab business.
“Thanks to the leadership of President Biden and Vice President Harris, our CHIPS award is enabling Intel to drive one of the most significant semiconductor manufacturing expansions in U.S. history,” Commerce Secretary Gina Raimondo said in a release.
“Intel is deeply committed to advancing these shared priorities as we further expand our U.S. operations over the next several years,” Intel CEO Pat Gelsinger said in the release.
CNBC earlier reported that the two sides were close to finalizing the grant.
The U.S. awarded Taiwan Semiconductor Manufacturing Co. a $6.6 billion grant earlier this month, raising investor expectations that cash funding for Intel would come soon. Intel has benefited from CHIPS tax breaks but had not yet received cash awards, something which Gelsinger has expressed dissatisfaction with.
“We’re frustrated that hasn’t moved faster,” Gelsinger told CNBC in October, referring to the CHIPS grants. “They’ve been too bureaucratic in that process. We’re anxious to see those finished.”
Intel’s struggles have intensified since the grant was initially announced. The New York Times, citing four people familiar with the matter, reported Sunday that the government had decided to decrease the grant by roughly $500 million due to uncertainties about Intel’s ability to execute on its investment commitment, and because of Intel’s shifting technology road map and customer demand. Senior administration officials said the reduced award did not have anything to do with issues at Intel.
U.S. House Speaker Mike Johnson, R-La., had previously said he might look to repeal the bipartisan legislation, but he then walked back those comments. The Biden administration and grant awardees have touted the legislation as a job-creating machine.
Intel’s struggles have increased significantly this year. The company posted a nearly $17 billion loss last quarter and has been dialing back Gelsinger’s ambitious plans worldwide.
Intel announced earlier this year it would trim 15,000 jobs via layoffs and voluntary buyouts. It has made moves to make its foundry business more easily separable from its legacy business, and has been working with advisors on activist defense and a broader strategic review, people familiar with the matter previously said. Intel is also seeking to raise cash via a minority stake in the Altera business, CNBC previously reported, and has been sounding out interested acquirers for weeks.
CNBC’s Megan Cassella contributed to this report.