Intel’s stock has faced challenges this year, but it experienced a notable uptick on Monday following the announcement that it qualifies for additional funding through the U.S. Chips and Science Act. The chipmaker’s shares increased by 6.3% to close at $20.91, and during after-hours trading, they surged by more than 10%. However, Intel’s stock is still down approximately 56.2% year-to-date.
On Monday, the U.S. Department of Defense and the U.S. Department of Commerce revealed that Intel has been awarded up to $3 billion in direct funding from a segment of the Chips Act known as the Secure Enclave program. This initiative aims to bolster the manufacturing of advanced chips for the federal government, with the Defense Department overseeing the allocation of the funds.
The joint statement from the departments emphasized that the funding is intended to support microelectronics manufacturing and ensure a domestic supply chain of advanced semiconductors, crucial for national security.
This Secure Enclave funding is distinct from the anticipated up to $8.5 billion in direct funding under the Chips Act, aimed at enhancing U.S. semiconductor production amidst the burgeoning artificial intelligence sector and competition with China. Announced in March, this funding will support Intel’s ambitious plans to invest over $100 billion in U.S. manufacturing over the next five years, with plans for additional chipmaking facilities in Arizona, New Mexico, Ohio, and Oregon.
Chris George, president and general manager of Intel Federal, remarked, “Today’s announcement highlights our joint commitment with the U.S. government to fortify the domestic semiconductor supply chain and ensure that the United States maintains its leadership in advanced manufacturing, microelectronics systems, and process technology.”
In another development on Monday, Intel and Amazon Web Services announced a multi-year, multi-billion-dollar partnership to enhance chipmaking in Ohio. As part of this collaboration, Intel will produce an AI fabric chip for AWS using its most advanced process technology, Intel 18A, along with a custom Xeon 6 chip on Intel 3. Intel is also reportedly exploring options to separate its foundry business into a subsidiary with its own board.
Moreover, Intel is actively seeking strategies to address its struggling business. In August, the chipmaker fell short of profit expectations, with CEO Pat Gelsinger attributing this to a decision to accelerate the rollout of its Core Ultra AI CPUs, which are designed for AI applications. Gelsinger announced plans to reduce expenditures, which include laying off over 15% of the workforce.