Shares of American chipmaker Intel are marginally higher in premarket trading following a Friday evening Bloomberg report indicating the company could secure up to $3.5 billion in federal grants to manufacture chips for US military and intelligence applications.
The report was based on sources familiar with the chipmaker's binding agreement with US officials. They said the secretive Pentagon program, 'Secure Enclave,' that awarded Intel $3.5 billion, is a move by the military to produce chips domestically, more especially in several states, including a facility in Arizona.
Here's more from Bloomberg:
The funding could be announced as soon as next week, said the people, who asked not to be identified because the discussions are private. It would add to a possible $8.5 billion in grants and $11 billion in loans that Intel was awarded in March under the Chips and Science Act, a law that President Joe Biden signed in 2022 to revitalize US semiconductor manufacturing and reduce reliance on Asia.
Intel is still negotiating the terms of that broader incentive package, which is intended to support facilities in Arizona, Ohio, New Mexico and Oregon. Like other Chips Act winners, Intel hasn't received any money yet, and its award is considered preliminary. The funding for Secure Enclave also comes from the Chips Act grant program administered by the Commerce Department — following a dispute earlier this year over which agency would be responsible — but was handled outside of the standard application process.
The agreement on Secure Enclave comes amid the dumpster fire at Intel under the direction of CEO Pat Gelsinger, who is doing his best to replace Marissa Mayer as the most overpaid and useless 'turnaround' CEO in tech history.
Last month, the struggling chipmaker reported a devastating earnings report and revenue forecast that sent shares plunging. On the year, Intel has tumbled nearly 61% (as of Friday's close). Shares are up around 2% in premarket trading in New York.
Intel's turnaround plan includes cost-cutting measures like selling businesses, such as the programmable chip unit Altera, which Intel can no longer support due to its dwindling profits, according to a source from Reuters. CEO Gelsinger's plan to save the sinking ship will be unveiled to the company's board as soon as this week.
