Key Takeaways:
- Intel Corp. shares fell 3% Wednesday after the Pentagon withdrew a planned $2.5 billion chip grant for the semiconductor company, according to Bloomberg.
- President Biden’s spending package has allocated $3.5 billion in defense funding for Intel, but the company may now have to turn to the Commerce Department.
- Intel aims to secure more than $10 billion in incentives from the CHIPS and Science Act.
Intel Corp. (INTC) shares faced a 3% decline on Wednesday following reports that the Pentagon had withdrawn its plan to allocate up to $2.5 billion for a chip grant to the company. Bloomberg reported the development.
This decision by the Pentagon could potentially reduce the federal funding available to Intel, prompting the chipmaker to seek additional funds from the Commerce Department, responsible for disbursing grants under the Chips Act. Previously, the Commerce Department was only responsible for $1 billion of the cost.
In addition to seeking defense funding, Intel has been pursuing incentives valued at over $10 billion from the CHIPS and Science Act, according to Bloomberg.
The defense funding was part of a spending package recently signed into law by President Joe Biden, aiming to provide Intel with $3.5 billion to produce advanced semiconductors for military and intelligence programs. However, the article did not provide an explanation for the Pentagon’s withdrawal of the funding.
The Pentagon’s decision comes in the wake of Intel’s recent announcement that the U.S. government awarded the company a billion-dollar contract “to create this trusted, secure environment.” Intel anticipates benefiting from CHIPS Act funding. The growth of Intel Foundry could contribute to the United States gaining a larger share of the global semiconductor manufacturing market, currently dominated by Taiwan, particularly Taiwan Semiconductor Manufacturing Co. (TSM).
Intel shares experienced a 3% decline, trading at $43.80 as of 1:10 p.m. ET on Wednesday.