November 25, 2024 – According to informed sources cited by The New York Times, the Biden administration in the United States is planning to reduce the initial 8.5billionallocationfromtheChipsandScienceActgrantedtoIntelCorporation.Thefundingamount,whichwasannouncedearlierthisyear,isexpectedtobecuttobelow8 billion. This change in conditions takes into account a $3 billion contract obtained by Intel to produce chips for the U.S. military.
The U.S. government’s decision to decrease funding is linked to Intel’s delayed investment in Ohio. The company has postponed a project originally scheduled for completion in 2025 to the end of the decade. Additionally, Intel recorded a record loss in its recent quarter, forcing the company to significantly reduce costs.
This move also considers Intel’s technological approach and market demand. Although Intel is attempting to catch up with Taiwan Semiconductor Manufacturing Company (TSMC), it still faces a gap in technological competition and customer trust.
Intel’s challenges have impacted the U.S. government’s plan to promote the “reshoring of the chip industry to America.” In March of this year, Biden proudly announced Intel’s receipt of significant funding, stating that its investment would revolutionize the semiconductor industry.
The aforementioned Chips and Science Act is central to this initiative, aiming to provide $39 billion in subsidies to boost domestic chip manufacturing in the United States and reduce dependence on Asian supply chains. The Act also stipulates that funded companies must achieve specific objectives, such as establishing factories, commencing production, and securing customer orders.
While Intel was once viewed as the biggest winner of this Act, its business difficulties have added complexity to funding negotiations. The funding from the U.S. Department of Commerce was primarily intended for Intel’s expansion across the United States, including the construction of new factories.
