The US Commerce Department plans to reduce Intel’s preliminary $8.5bn CHIPS Act award to less than $8bn, the New York Times reported.
The department’s decision to cut the award by at least $500m is reportedly linked to Intel’s delay in completing an Ohio chip manufacturing facility.
Initially scheduled for completion by next year, the facility’s timeline has now shifted to the end of the decade.
This decision follows the government awarding up to $3bn in direct funding in September under the CHIPS and Science Act for the Secure Enclave programme to Intel.
As per the $3bn contract, Intel is set to manufacture semiconductors for the US Department of Defense.
This development comes as Intel faces significant financial challenges. The company is said to be grappling with its largest quarterly loss in 56 years, prompting the company to scale back investments and focus on cost reduction.
The US Government announced nearly $20bn in grants and loans for Intel to boost domestic semiconductor chip production this spring.
This was part of the administration’s plan to enhance US chip manufacturing capabilities.
The US announced a preliminary agreement for $8.5bn in grants and up to $11bn in loans for Intel in Arizona.
The funding was intended for building two new factories and modernising an existing one.
This initiative is part of the 2022 CHIPS and Science Act, which aims to bolster domestic semiconductor output with $52.7bn in funding.
Last month, the US Government announced plans to impose caps on exports of advanced AI chips to specific countries.
This development is said to be part of a broader strategy to manage national security risks associated with the proliferation of AI technology.
“US cuts Intel’s federal chips grant to below $8bn amid new deal” was originally created and published by Verdict, a GlobalData owned brand.
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