Pentagon Rethinks Direct Funding to Intel for US Chip Production Projects

The Pentagon Rethinks Funding Intel’s Chip Production Projects

Intel corporation, known for its dominance in the semiconductor industry, has witnessed a shift in potential funding for its chip production in the US. Previously, the company relied both on subsidies from the US Department of Commerce under the so-called “Chip Act” and a $2.5 billion direct support plan from the Pentagon. This financial assistance was meant to gear up the domestic production of advanced components for military customers. However, the Pentagon now aims to transfer the burden of supporting Intel entirely to the US Department of Commerce.

Funding Challenges

As reported by Bloomberg, with this revised scheme of financing, Intel may end up receiving a lesser aggregate amount than initially planned. The “Chip Act” itself limits to $39 billion the funding accessible for the establishment of semiconductor component production facilities in the US. This fund attracted a large number of contenders, resulting in Intel’s share of the fund remaining undefined by the Department of Commerce. Until now, Intel anticipated no less than $10 billion from it to help build four chip manufacturing plants in the US.

Pending Decisions

It was expected that of the $3.5 billion reserved for Intel to advance the production of state-of-the-art chips for US defense needs, the commerce agency would allocate no more than $1 billion. The Pentagon was supposed to provide the remaining $2.5 billion. However, according to sources, the defense agency’s budget is lacking in necessary funds for financing Intel. If the deficit needs to be covered from the “Chip Act”‘s pool, then less money than planned would be available for Intel’s commercial initiatives. At least $3.5 billion would have to be held for defense initiatives. However, the final subsidy system for Intel’s projects remains undecided, it’s still early to draw conclusions.

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