Intel Agrees to Terms, Will Receive Up to $7.9 Billion in CHIPS Funding

Intel (INTC) and the Biden administration have finalized terms to an agreement that will see the chipmaker receive up to $7.86 billion in CHIPS Act funding, down from the originally announced $8.5 billion preliminary agreement in March.

The money will be spread across Intel’s existing and yet-to-be-built facilities in Arizona, Ohio, New Mexico, and Oregon, and fuel Intel’s planned investments of nearly $100 billion in expanding its U.S. operations. The funding will be awarded as Intel achieves milestones on the different projects, the U.S. Department of Commerce said Tuesday.

The funding package is smaller than the preliminary agreement funding of up to $8.5 billion announced in March because of Intel’s involvement in a separate defense-related program that also provides CHIPS funding, the company said.

CHIPS Funding Could Help Intel’s Turnaround Effort

The funding will also aid CEO Pat Gelsinger’s plans to turn Intel around after a number of disappointments for the chipmaker and its stock this year. Last month, he said the company had made “solid progress” on its efforts so far, but acknowledged there is “a lot of work in front of us” going forward.

Intel stock has slumped this year as the chipmaker has fallen behind its semiconductor rivals, posting a larger-than-expected loss in the second quarter and announcing plans to lay off 15% of its workforce. Shares have also received some positive news this year, including potential takeover offers, sales of some assets, and other investments.

However, Bloomberg on Tuesday reported that Qualcomm’s (QCOM) interest in potentially acquiring Intel has subsided. Some analysts had called the idea “perhaps impractical” because of Intel’s large debts and the governmental hurdles the deal would have to clear.

Commerce Department officials said that more finalized CHIPS Act funding agreements are likely to be announced in the coming weeks as the Biden administration works to finalize as many of the deals as possible before the presidential transition process in January, the Wall Street Journal reported.

Intel shares were up more than 0.7% to around $25.05 Tuesday morning, as they have lost half their value since the start of the year.