Intel Finalises US CHIPS Funding But With Some Rather Unusual T&C's

they even contemplate an Intel bankruptcy!

Intel yesterday announced that the company has been awarded $7.86 billion in funding under the US CHIPS Act.

This was just under $1 billion less than the $8.5 billion originally touted back in March when President Joe Biden and his entourage attended a high profile event at Intel’s Ocotillo campus to make the announcement:

The reason for the discrepancy is reported by Intel to be because a separate $3 billion in funding previously allocated for Intel to establish a “Secure Enclave” program must now be funded under the CHIPs Act funding.

The final total award is less than the proposed preliminary award due to a congressional requirement to use CHIPS funding to pay for the $3 billion Secure Enclave program.

Here, Intel makes it sound like this congressional requirement was a change to what was originally planned, but this is in directly contradicts what Intel told us back on September 24 this year, details here:

SANTA CLARA, Calif., September 16, 2024 – The Biden-Harris Administration announced today that Intel Corporation has been awarded up to $3 billion in direct funding under the CHIPS and Science Act for the Secure Enclave program. The program is designed to expand the trusted manufacturing of leading-edge semiconductors for the U.S. government.

The Secure Enclave award is separate from the proposed funding agreement that Intel reached with the Biden-Harris Administration in March of this year to support the construction and modernization of semiconductor commercial fabrication facilities under the CHIPS and Science Act.

So, if you do some math and add the $3 billion secure enclave funding to the $8.5 billion originally promised back in March, Intel is coming up $3.64 billion short, or around 30% below what was previously on the table.

As you might expect, Intel’s press release on the funding was an upbeat and positive sounding affair with plenty of accolades built in for good measure. According to CEO Pat Gelsinger, everything is going just great:

With Intel 3 already in high-volume production and Intel 18A set to follow next year, leading-edge semiconductors are once again being made on American soil

This, of course, is not true. All of Intel’s leading edge products continue to rely heavily on TSMC’s advanced process nodes, so unless Taiwan has secretly been designated as “US soil”, Mr Gelsinger is incorrect on this point. Mr Gelsinger also reiterates his plan to use the investment to support more than 10,000 company jobs:

As previously announced, Intel’s planned U.S. investments, including projects beyond those supported by CHIPS, support more than 10,000 company jobs, nearly 20,000 construction jobs, and more than 50,000 indirect jobs with suppliers and supporting industries.

This plan must be particularly galling for the likely >10,000 employees the company has been busy firing in the US over the course of the past couple of months. Who knows, perhaps they will all get their jobs back again next year?

In any case, while the press release was entirely couched in positive messaging, the details provided in the 8-K which Intel just filed yesterday tell a completely different story. There’s T&C’s in there that would make you think Intel may be going of out business any time soon. Let’s dig in…