The US government is likely to delay handing over the $8.5 billion of CHIPS Act funding to Intel, due to the company’s ongoing financial woes.
According to a report from Bloomberg, the Department of Commerce has reportedly declined the request for funds, instead insisting that the troubled chipmaker must first meet key milestones and conduct significant due diligence before it will consider releasing the money.
Intel has been trying to negotiate with the government to have the funds released faster, but has become “frustrated” with the situation.
Under the terms of the agreement, Intel was set to receive $8.5 billion in direct funding in addition to $11bn in low-interest rate loans and a 25 percent investment tax credit on up to $100 billion of Intel’s capital investments in Arizona, New Mexico, Ohio, and Oregon.
However, the company has been plunged into turmoil after posting a $1.6bn net loss for Q2 2024. As a result, Intel is now undertaking a $10 billion cost-cutting plan that involves eliminating more than 15,000 jobs from its global workforce and could also see it sell off its Altera programmable chip unit and scrap its planned $32bn factory in Germany.
CEO Pat Gelsinger is expected to present the company’s board of directors with a plan to offload company assets and cut costs this month.
Approved by Congress in July 2022, the CHIPS and Science Act was established to boost the US domestic semiconductor industry, with funding from the act earmarked for semiconductor R&D and incentives for the manufacturing of semiconductors and specialized tooling equipment.
Growing a skilled semiconductor workforce is also a core tenet of the act, which likely makes handing over billions of dollars to a company like Intel that is actively cutting jobs politically problematic.
