Intel Set to Receive $8.5B in Chips Funding From US Govt by Year-End

Intel is set to receive an $8.5 billion relief package from the US government, expected to arrive before the elections in November.?

Intel may soon see some respite from its financial woes as it is expected to receive a major relief package from the US government soon. The chipmaker is set to receive $8.5 billion in funding from the federal government by the end of the year, the Financial Times reported.

This $8.5 billion is part of the $20 billion worth of grants and loans promised to Intel by the US government under the Chips and Science Act in March this year. This grant, aimed at bolstering domestic semiconductor production, is likely separate from the additional $3 billion the government announced earlier this month for development of the Secure Enclave program that Intel will run alongside the US Department of Defense.

Traditionally a leader in the x86 PC chip space, Intel has been feeling the heat from the rise of Arm-based chips for laptops, especially with Qualcomm entering the space with its Snapdragon X series chips. Competition, along with Intel’s slow pace of innovation, have led to cutting costs to compensate for missing last quarter’s revenue targets. Amid this, Intel will also be laying off 15,000 employees, it announced last month.

Intel not keen on selling business to recover losses

Intel has also devised a plan to separate its chip design and manufacturing businesses. But despite previous rumors about it considering selling part of the business, Intel has rejected offers from Arm Holdings as well as Qualcomm.

Intel’s apprehension could have stemmed from anticipating the US government’s funding. The FT noted that any partial or entire takeover could disrupt this funding, which may explain Intel’s hesitation. Even if Intel and Qualcomm were to agree a deal, the union between two of the biggest chip makers in the US would further delay matters and likely invite an antitrust investigation and further delay any relief for Intel.

In addition to allying Intel’s financial troubles, the existing administration may be keen on finalizing the deal before the country enters elections in the first week of November. The other $11 billion is expected to come in the form of loans, but a timeline for that has yet to be confirmed. Intel has pledged to spend $100 billion to create new manufacturing plants across various locations in the US to boost domestic production.

Despite these, Intel has continued to release new products. After showcasing its second-gen Core Ultra aka Lunar Lake chips earlier this month, Intel recently announced it will start shipping Xeon 6 and Gaudi 3 AI accelerators to data center clients. The company is also expected to announce its new generation of PC and laptop gaming chips codenamed Arrow Lake sometime later this year.