The US authorities are delaying the transfer to Intel of funds for the development of production in the US, which were allocated as part of the Chips and Science Act, writes Bloomberg. Back in March 2024, the White House promised the company to allocate about $20 billion, but so far the company has not received a penny, since in order to do this it needs to achieve agreed upon key indicators, as well as undergo a large-scale due diligence.
Image Source: Intel
Intel is set to receive the largest amount of money under the Chip Act: $8.5 billion in grants and $11 billion in loans at preferential interest rates. It was also given a tax deduction of 25% for up to $100 billion, which was also done under certain conditions.
The U.S. government has been slow to issue grants after Intel’s disastrous second-quarter earnings report, which it reported with a loss of $1.61 billion. The company also provided a gloomy outlook, after which its shares fell 26%, the biggest intraday drop in decades. . It also became known about Intel’s decision to lay off 15% of its workforce. Considering that the “CHIP Act” is aimed, among other things, at increasing the number of American workers in the chip industry, this could not but cause criticism from the White House.
Intel’s problems were further exacerbated after shareholders sued it due to a drop in shares that threatened to lose its place in the Dow Jones Industrial Average. In an effort to cope with the crisis, Intel’s board of directors is considering cutting non-performing assets, including suspending or canceling construction of a chip factory in Magdeburg, Germany, and selling a stake in Altera.
According to people familiar with the matter, a meeting of Intel’s board of directors will be held in mid-September to determine further steps to overcome the crisis. If the company scales back its US projects, the size of its subsidy package will almost certainly change as well.