Intel gets $3 billion from Pentagon to produce chips for military; stocks rise
Intel shares rose 6.4 percent to $20.91 on Monday on the news. The stock remains down 58 percent this year | Photo: Bloomberg
By Mackenzie Hawkins
Intel Corp. said Monday it has qualified for up to $3 billion in funding from the U.S. government to produce chips for the military, confirming earlier reports from Bloomberg.
The effort, called Secure Enclave, is aimed at creating a steady supply of advanced chips for defense and intelligence purposes. The award is separate from a potential $8.5 billion grant from the Chips and Science Act of 2022 that would support Intel’s commercial fabs in four U.S. states. In a separate statement Monday, Intel said those projects continue to move forward.
Intel shares rose 6.4 percent to $20.91 on Monday on the news. The stock remains down 58 percent this year.
Lawmakers in March earmarked $3.5 billion for the military program as part of the Chips Act, which aims to boost the U.S. semiconductor industry and reduce reliance on Asia. The $3 billion deal with Intel includes Secure Enclave funding allocated to the Commerce Department for fiscal years 2024 and 2025, which began July 1.
Commerce is responsible for the broader Chips Act grant program, but the Defense Department will actually handle the Secure Enclave award, according to a joint statement from the two agencies. That money will be disbursed in two phases, a U.S. official said.
The remaining $500 million for Secure Enclave will be allocated to Commerce in fiscal year 2026, according to the text of the March bill. Intel has long been the only intended beneficiary of the program, as Pentagon officials have pushed for the ability to obtain advanced chips from a U.S. supplier.
In reaching the agreement announced Monday, the Commerce Department relied on the Defense Department’s assessment that Intel is uniquely qualified to meet the program’s goals and requirements, said the official, who asked not to be named because the discussions were confidential.
“Today’s announcement underscores our shared commitment with the U.S. government to strengthen the domestic semiconductor supply chain,” Chris George, president and general manager of Intel Federal, an Intel subsidiary focused on government work, said in a statement. The Departments of Defense and Commerce said in a joint statement that the award “builds on Intel’s work with the DoD and will further strengthen our national security.”
First publication: Sep 17, 2024 | 09:23 AM IST