Intel’s turbulent year seems to have made the US government a bit hesitant on investing upwards of $19 billion with company as part of the heralded Creating Helpful Incentives to Produce Semiconductors Act (CHIPS).
According to a report from Bloomberg, the US government had earmarked $8.5 billion in grants and $11 billion in loans via CHIPS Act resources for Intel but as 2024 continues to unravel, that money could remain just out of reach for the company.
As part of the allocation agreement, there are certain milestones that companies need to meet to assure the government that investment will net return but with Intel reporting a net loss of $1.61 billion last quarter, a 15,000-employee reduction, class action lawsuit over its latest generation chips and upset shareholders, investing in the company seems like losing proposition at the moment.
While every tech company is going through some degree of influx at the moment, Intel also appears to be compounding the governments fears by being less than transparent.
It seems Intel is not providing the Biden administration with a full and transparent report of the company’s viability, according to Bloomberg reports who spoke to people associated with discussion between the two parties.
While neither Intel or the US Commerce Department have issued specific responses to the claims, internal memos issued to Intel’s staff crystallize the dire straits the company finds itself in currently, and why the Biden admin would be justified in holding of on the release of $19 billion in funds.
Our revenues have not grown as expected—and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, and our margins are too low. We need bolder actions to address both—particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.
Pat Gelsinger – Intel CEO
Interestingly enough, Intel seeded a plan to become home to several chipmakers fabrications as it unveiled its plan to be a diverse foundry back before the pandemic. Intel executives explained a roughly five-year turnaround on the company’s previous trajectory as it seemingly missed the mobile craze, and seeing increased competition in the server and PC markets from competitors such as NVIDIA, Qualcomm, and AMD>
Unfortunately, Intel’s foundry pivot is taking longer to materialize as success as the company marked down a $7 billion loss on the efforts last year.
Until Intel can start to show some positive momentum in any direction over the next few months, that $19 billion in CHIPS Act funding will probably remain on ice for the company and only adding to what’s becoming another awful year for the company.
