Pentagon pulls out of Intel's $3.5 billion CHIPS Act grant, expects Commerce Department to foot the bill

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Department of Commerce was meant to disburse CHIPS Act grants but is now being held responsible for the full $3.5 billion cost, not just $1 billion + Pentagon funding

The Pentagon
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Following recent news pointing toward Intel receiving billions of government funding and special "secure enclave" treatment under the CHIPS Act aimed at all US semiconductor businesses, the Pentagon has withdrawn the planned $2.5 billion and expects the Commerce Department to pick up the tab, reports Bloomberg.

Specifically, Intel was to receive $1 billion of $3.5 billion from the Department of Commerce, with the rest coming from the Pentagon. The $2.5 billion shortfall could possibly be made up with other CHIPS Act funds at the direction of the Commerce Department. This isn't just a loss for Intel, it could also impact others. It all depends on how this total is split across the rest of CHIPS Act recipients.

Additional analysis from The American Prospect further highlights just how poor the optics and management of Intel's proposed $3.5 billion "secure enclave" facility are. A senior adviser and research professor at Georgetown University told the Prospect: "My first reaction is to emphasize that this is nearly 10 percent of the entire CHIPS Act fund. And by doing this, that will necessarily foreclose other opportunities."

Considering the main purpose of the CHIPS Act is to revitalize American fabrication and manufacturing operations, diverting so much of that money to the incumbent market leader could be seen as a poor approach. What's worse, reports indicate Intel is still demanding more than the $10+ billion it is already set to receive through the CHIPS Act. The overall demands from all companies covered by the CHIPS Act has risen to more than $70 billion in requested combined subsidies and aid, roughly twice the amount of funding that is actually available.

As the Chip War continues to develop, the United States government will need to be careful about how domestic chip and semiconductor production is handled. So far, it seems like Intel's "secure enclave" facility may be one of the first major cuts to the U.S's steps forward, though getting rid of it would seem to benefit all other recipients of the CHIPS Act. 

Christopher Harper
Christopher Harper
Contributing Writer

Christopher Harper has been a successful freelance tech writer specializing in PC hardware and gaming since 2015, and ghostwrote for various B2B clients in High School before that. Outside of work, Christopher is best known to friends and rivals as an active competitive player in various eSports (particularly fighting games and arena shooters) and a purveyor of music ranging from Jimi Hendrix to Killer Mike to the Sonic Adventure 2 soundtrack.

10 Comments Comment from the forums
  • Pierce2623
    Yet we still manage to get Pat G ballriders around here quite often. Yeah now you’ll support the market leader demanding the entire Chips Act for themselves. Intel is great at looking like douchebags. As far as I’m concerned, Intel, AMD and Nvidia should all be totally disqualified from receiving Chips act funding. They’re all huge multinationals that really only claim to be American when it’s beneficial.
    Reply
  • cyrusfox
    Pierce2623 said:
    Yet we still manage to get Pat G ballriders around here quite often. Yeah now you’ll support the market leader demanding the entire Chips Act for themselves. Intel is great at looking like douchebags. As far as I’m concerned, Intel, AMD and Nvidia should all be totally disqualified from receiving Chips act funding. They’re all huge multinationals that really only claim to be American when it’s beneficial.
    Nvidia and AMD don't run fabs, they were never in the running for chips act.
    Reply
  • NinoPino
    The moneys of CHIPS that goes to Intel are a concern for a fair concurrency vs AMD in primis and also any other Intel competitor.
    The only way to give subsidies to Intel and mantain a fair competition would have be to split the manifacturing division from Intel and create an independent company.
    Reply
  • TechLurker
    NinoPino said:
    The moneys of CHIPS that goes to Intel are a concern for a fair concurrency vs AMD in primis and also any other Intel competitor.
    The only way to give subsidies to Intel and mantain a fair competition would have be to split the manifacturing division from Intel and create an independent company.
    Seems like it might be heading that way regardless; Intel recently stated they're looking to put up a metaphorical wall between Intel Design and Intel Fabs via a new and entirely separate Fabrication business and management team whose focus will be getting customers regardless of who they are, and getting their Fabs operating at full tempo. Even if it meant that in a theoretical, AMD or NVIDIA would have a larger production share than Intel on occasion. Moreso considering the costs of investment to keep their Fabs roughly on par with TSMC and Samsung, and making back the investments through production sales.
    Reply
  • NinoPino
    TechLurker said:
    Seems like it might be heading that way regardless; Intel recently stated they're looking to put up a metaphorical wall between Intel Design and Intel Fabs via a new and entirely separate Fabrication business and management team whose focus will be getting customers regardless of who they are, and getting their Fabs operating at full tempo. Even if it meant that in a theoretical, AMD or NVIDIA would have a larger production share than Intel on occasion. Moreso considering the costs of investment to keep their Fabs roughly on par with TSMC and Samsung, and making back the investments through production sales.
    I mean completely separates entities, another CEO, another board, another corporate ownership.
    Actually the silicon division is separated only from an operational point of view but at the end of fiscal year is always Intel.
    Reply
  • jkflipflop98
    Pierce2623 said:
    Yet we still manage to get Pat G ballriders around here quite often. Yeah now you’ll support the market leader demanding the entire Chips Act for themselves. Intel is great at looking like douchebags. As far as I’m concerned, Intel, AMD and Nvidia should all be totally disqualified from receiving Chips act funding. They’re all huge multinationals that really only claim to be American when it’s beneficial.

    Tell me you don't know squat about the industry without telling me you don't know squat about the industry...
    Reply
  • Squishynidas
    As far as I know, Intel is the largest semiconductor manufacturer in the USA. If the goal is to make US semiconductor manufacturing stronger, it makes sense that Intel is getting quite a bit.
    Reply
  • JayNor
    "Considering the main purpose of the CHIPS Act is to revitalize American fabrication and manufacturing operations, diverting so much of that money to the incumbent market leader could be seen as a poor approach."

    ... an incumbent who funded the last15 years of research into advanced packaging, backside power delivery, GAA transistors and now is willing to expand fab capacity and provide a much needed second source.
    Reply
  • kjfatl
    Intel has a 9.1% share of the worldwide semiconductor market. To be competitive on a worldwide stage they need to be at 20% or higher. The only other US player that is significant is TI. Global foundries and the other remaining US fabs are akin to penny stocks vs the S&P500.
    Reply
  • Disappointed1
    Intel is watching TSMC flaunt the buy American part of the Chips Act and still receive funds when they import significant quantities of construction materials manufactured in Asia that are readily available from US manufacturers. If TSMC gets away with it, Intel will also purchase materials from Asia….
    Reply