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Intel Stands to Win $3.5 Billion to Produce Chips for Military

(Bloomberg) -- The US government is poised to invest $3.5 billion in Intel Corp. so the chipmaker can produce advanced semiconductors for military and intelligence programs, according to congressional aides.

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The money, tucked into a fast-moving spending bill the House passed on Wednesday, would establish Intel as a dominant domestic player in the lucrative defense market.

The funding, which would run over three years, is for the “secure enclave” program. It comes from a broader $39 billion Chips and Science Act grant pool that’s designed to convince chipmakers to produce semiconductors in the US. More than 600 companies have expressed interest in the funding.

The Wall Street Journal reported in November that Intel was in talks for between $3 billion and $4 billion in government subsidies from the program.

Intel is set to receive a total Chips Act incentive package of more than $10 billion that includes both grants and loans, Bloomberg has reported. The company declined to comment on the pending $3.5 billion investment.

Read More: Intel in Talks for Over $10 Billion in Chips Act Incentives

“We are still reviewing the effect of the appropriations text on the program,” the Commerce Department said in a statement. “The department looks forward to continuing to work with Congress on implementing the Chips and Science Act in a manner the promotes our economic and national security.”

The Senate is expected to pass the legislation by a Saturday deadline.

The funding comes as Commerce prepares to announce multi-billion-dollar awards to advanced chipmakers like Intel and Asian rivals Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., all with the goal of building domestic manufacturing capabilities.

The agency has already announced three grants, including a smaller national-security focused award to the American subsidiary of BAE Systems Plc and a $1.5 billion grant to GlobalFoundries, which produces older-generation semiconductors.

Senators Maria Cantwell, who chairs the Commerce Committee, and Roger Wicker and Jack Reed, the top Republican and Democrat on the Armed Services Committee, raised concerns last year about the decision to provide an award to one company to build a secure enclave at a higher cost than what might otherwise be required to secure those chips, the aides said.

The initiative is separate from an existing Defense Department program that identifies secure facilities to supply military chips, including from firms like GlobalFoundries and IBM. The Pentagon has also separately awarded $238 million to eight regional technology hubs focused on semiconductors with defense applications.

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