Intel Exempt from CHIPS Act Restrictions After Government Acquires Stake

In a recent development: Intel (Intel) is no longer bound by specific requirements and achievements imposed under the CHIPS Act, following the government's acquisition of a stake in the company.

It is worth noting that: The CHIPS and Science Act of 2022 is a U.S. federal statute signed into law by President Joe Biden on August 9, 2022. The Act primarily aims to boost domestic research and semiconductor manufacturing within the United States, support the U.S. supply chain for this vital industry, and encourage applied scientific research, while imposing restrictions on expanding semiconductor manufacturing in certain countries that pose a national security threat. Source: Wikipedia.

Details of Financial Support and Concessions

According to reports: The Wall Street Journal, Intel clarified in a disclosure that it can now receive financial support from the government. This support is contingent on Intel proving it has already spent $7.9 billion on approved projects under its agreement with the Department of Commerce last year. Reuters reported that Intel spent $7.87 billion on projects eligible for funding under the CHIPS Act.

Furthermore: Intel was exempted from the obligation to share a percentage of its total cumulative cash flow from each project with the Department of Commerce. It is also no longer bound by certain work policy requirements and most other restrictions stipulated in the CHIPS Act. However, restrictions remain on using government funds for dividend distribution or share buybacks.

Government Acquisition and Trump's Intervention

In a notable development: The government recently decided to acquire a 10% stake in Intel, exceeding the initial agreement under the CHIPS Act. This decision came after President Donald Trump called for the resignation of Intel CEO, Bob Swan, which resulted in a meeting that led to the new agreement. Trump then stated: "He came and he wanted to keep his job, and he ended up giving us $10 billion for the United States."

Intel later announced: that the U.S. government "will invest $8.9 billion in Intel common stock." This investment consists of $5.7 billion previously allocated to Intel under the CHIPS Act, plus an additional $3.2 billion granted as part of the Secure Enclave program.

Total Government Support for Intel

David Zinsner: Intel's CEO, recently stated that the company received $5.7 billion from the government on Wednesday. Including $2.2 billion from previous government grants under the CHIPS Act, the total government support provided to Intel amounts to $11.1 billion.