Intel gains on report of billions in funding for U.S. defense chip facility

Intel, which is investing billions in new U.S.-based foundries, is reportedly the prime candidate for government funding of secure chip facilities for the U.S. military.

Nov 7, 2023 - 19:30

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Intel gains on report of billions in funding for U.S. defense chip facility

Intel INTC shares edged higher Tuesday following reports that suggest the chipmaker has the inside track in securing a multi-billion dollar deal with the U.S. government to build a secure facility that produces military technology.

The Wall Street Journal reported that Intel, perhaps the most-vocal supporter of President Joe Biden's $53 billion Chips and Science Act, could use its facility in Arizona to produce microchips for both the U.S. military and U.S. intelligence as part of the government's effort to reduce reliance on overseas technologies.

The Journal noted that, while no formal indication as to the size of the grant, or the company it will ultimately go to, has been made, Intel could get between $3 billion and $4 billion in funding for the facility from the $39 billion in manufacturing grants earmarked under the Chips Act.

Intel unveiled plans in 2021 to invest $20 billion in two Arizona-based factories as it eyed Chips Act support, with CEO Pat Gelsinger vowing Intel would be the U.S. market leader in semiconductor foundries.

Last last month, Gelsinger said Intel had "submitted all four of our major project proposals in Arizona, New Mexico, Ohio, and Oregon, representing over 100 billion of U.S. manufacturing and research investments, to the CHIPS program office and are working closely with them as they review these proposals."

The group posted better-than-expected fourth quarter earnings, as well, as it lined-up new customers for its nascent foundry business and saw a rebound in demand for its PC-focused chips.

Intel shares were marked 0.53% higher in pre-market trading to indicate an opening bell price of $38.15 each.