Intel Corp. is set to have a promising week as its manufacturing business stands to receive substantial funds from the Chips Act. The Biden administration is reportedly in talks to provide Intel with upwards of $10 billion in subsidies, a move that has investors feeling hopeful and resulted in a surge in Intel’s stock. The Chips Act was implemented to support the U.S. semiconductor-manufacturing industry, and Intel’s potential funding would be the largest award made with money from the act.
While Intel declined to comment on the matter, the Commerce Department spokesperson refrained from discussing potential subsidy applicants. However, the department did announce that it had agreed to preliminary terms with GlobalFoundries Inc., granting the company $1.5 billion to expand its capacity and modernize its manufacturing sites in New York and Vermont. This news also contributed to a 2% increase in GlobalFoundries’ shares.
Regardless of whether the Commerce Department officially announces an Intel grant, this week holds great significance for Intel’s chip-manufacturing business. On Wednesday, the company is hosting an event dedicated to its foundry business, which Melius Research analyst Ben Reitzes considers one of Intel’s “most important events in recent memory.” This event is particularly noteworthy as Intel had previously announced its intention to manufacture chips for other companies in addition to producing them for itself.
Reitzes emphasizes the importance of a stable domestic supply of semiconductors for the United States, comparing it to the country’s strategic oil reserves. As artificial intelligence technology continues to be integrated into various sectors, from missiles to tanks and fighter jets, having a reliable domestic foundry for AI chips is crucial. While Reitzes does not expect specific customer names to be disclosed at the event, he believes it may become evident based on the attendees’ profiles.
One key attendee who will be joining Intel’s event virtually is Commerce Secretary Gina Raimondo. Reitzes speculates that this conversation with Raimondo could potentially lead to a meaningful grant related to the U.S. Chips Act in the first half of the year. The outcome of this dialogue could have significant implications for Intel’s future plans and the overall semiconductor-manufacturing industry in the United States.
In conclusion, Intel’s manufacturing business is poised for success as it stands to receive substantial subsidies from the Chips Act. The potential funding of upwards of $10 billion would be a significant boost for the company and has resulted in a surge in its stock. This week holds great importance for Intel as it hosts an event dedicated to its foundry business, signaling its commitment to providing chips for other companies. With the support of the Biden administration and potential grants related to the Chips Act, Intel’s chip-manufacturing business is on track to secure a stable domestic supply of semiconductors, essential for the country’s technological advancements and national security.
