Chip Act funds promised to Intel by the White House in March 2024 will reportedly be delayed. Reports say Intel must meet the expectations agreed to in preliminary negotiations before the U.S. government will grant the subsidies. In addition, it must pass rigorous due diligence to ensure that billions of dollars of funds are not wasted.
Intel is one of the biggest beneficiaries of Biden's push to revitalise the US semiconductor industry, receiving $8.5 billion in grants plus $11 billion in low-interest loans. It also received a whopping $100 billion in 25 per cent tax credits. However, this huge amount of money did not come without strings attached.
Intel's recent downturn has caught the attention of the US government. The company posted a staggering $1.6 billion loss in the second quarter of 2024 as Intel's data centre CPU and foundry businesses did not perform as well as expected. Hot on the heels of the news was the news that Intel would be laying off 15 per cent of its workforce globally.
Intel is reversing the headwinds,, and its board is considering cutting back on non-performing assets, such as suspending or cancelling its chip plant in Magdeburg, Germany, and selling its stake in Altera. A massive infusion of capital from any source could give Intel much-needed breathing room to save its core business.
The U.S. government will only release these earmarked investments if the company proves it can deliver on its promises. Other companies that have received subsidies, such as TSMC and Samsung, have already made progress on their investments. TSMC's Arizona fab, for example, has achieved yields comparable to those of its Taiwan plant in China, while Samsung is considering upgrading its Texas fab to a 2nm process.
