Intel Shares Higher On Reports Of $10 Billion In Chip Act Incentives

In premarket trading in New York, Intel Corp.’s shares surged as much as 5.3% following a report by Bloomberg that the Biden administration intends to award the chipmaker over $10 billion in subsidies. This potential funding represents the largest award to date under the Biden administration’s $53 billion CHIPS initiative to revitalize domestic semiconductor production. 

People familiar with the matter said negotiations with the Commerce Department and Intel are underway. They said the funding package is expected to be a combination of loans and direct grants totaling upwards of $10 billion. 

Two years after Biden’s $53 billion CHIPS debuted, the Commerce Department announced only two tiny grants. US Commerce Secretary Gina Raimondo said weeks ago that her department could make additional awards over the next two months. 

Given that 170 firms have applied for CHIPS funding and only two grants have been dispersed, frustrating many with the slow pace of implementation, it appears the Biden administration will have to make sizeable awards as rebuilding America’s semiconductor production base is their “signature economic initiative” as elections approach. 

In Biden’s first term, semi-firms invested more than $230 billion in the US to boost future chip production and, hopefully, one day, propel the West as the leader in advanced chip production. 

As for Intel, the award is long overdue and great news for the company that has been crushed by foreign peers such as Taiwan Semi and ASML over the years. 

Intel shares have not recovered since Covid lows. The Bloomberg report has pushed shares up 3% in premarket trading around 0800 ET.

Bloomberg noted: “Intel is building a $20 billion facility in Ohio, undergoing a $20 billion expansion in Arizona, and investing $3.5 billion in New Mexico.” 

Next month’s State of the Union address could be the time and place when Biden showcases his economic achievements and announces new awards under CHIPS.

“It’s not yet clear how Intel’s award would be split between grants and loans,” the people added. 

We previously cited a Wall Street Journal report that expects a wave of CHIPS funding to be allocated finally. The program did very little for the last two years besides driving an AI and chatbot hype cycle. 


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