The Intel Corporation Receives $8.5 Billion in CHIPS Act Funding
Intel Corp. (INTC) shares rose about 2.5% in premarket trading Wednesday after the White House announced that the chipmaker has been awarded up to $8.5 billion in CHIPS Act funding to expand production in the U.S. Intel could also receive an additional $11 billion in loans from the CHIPS and Science Act, which was passed in 2022 and is meant to grow U.S. manufacturing of key industries like chipmaking amid growing geopolitical tensions with China.
What is the CHIPS Act?
The CHIPS Act, short for Creating Helpful Incentives to Produce Semiconductors for America, is a piece of legislation aimed at boosting domestic semiconductor manufacturing. The U.S. government has been looking to reduce its reliance on foreign-made chips, especially amid supply chain disruptions and national security concerns.
Intel’s Expansion Plans
The announcement of the funding will support the construction and expansion of Intel facilities in Arizona, Ohio, New Mexico, and Oregon, creating nearly 30,000 jobs and supporting tens of thousands of indirect jobs. Over the next five years, Intel expects its U.S. investments to exceed $100 billion, as it expands capacity and capabilities in those four states.
Intel will be creating more than 10,000 manufacturing jobs and nearly 20,000 construction jobs as part of this expansion. The Commerce Department stated that Intel, the largest U.S. chip manufacturer by revenue, has received the largest grant from the act so far.
Other Companies Receiving Funding
Chipmaker GlobalFoundries (GFS) secured a $1.5 billion grant in CHIPS Act funding to build a new facility in New York and expand its operations in Vermont. Microchip Technology Inc. (MCHP) also received $162 million in federal funding to boost production of semiconductors and microcontrollers earlier this year.
Defense contractor BAE Systems (BAESY) was the first company to receive a grant under the CHIPS Act in December when it got $35 million to modernize an aging factory in New Hampshire, which would allow it to quadruple its production capacity for chips essential to national security.
Impact on Intel’s Stock
Intel shares are down 12% year to date but up 44% over the past 12 months. The announcement of the funding and expansion plans could potentially boost investor confidence in the company’s future growth prospects.
Conclusion
The $8.5 billion in CHIPS Act funding awarded to Intel represents a significant investment in expanding domestic semiconductor production. This move aligns with the U.S. government’s efforts to strengthen national security and reduce reliance on foreign-made chips. Intel’s expansion plans in Arizona, Ohio, New Mexico, and Oregon are expected to create thousands of jobs and contribute to the growth of the U.S. semiconductor industry.
Overall, this funding is a positive development for Intel and the broader semiconductor sector, signaling a commitment to enhancing domestic manufacturing capabilities and ensuring a stable supply of critical components for various industries.
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