The progress of the chip project in the United States seems to be not going smoothly. According to insiders, the Pentagon has cancelled its plan to provide $2.5 billion in chip funding to Intel and instead asked the US Department of Commerce to provide funding. And this may limit the total amount of subsidies Intel will ultimately receive.
Intel has been hoping to receive incentives worth over $10 billion from its chip program in the United States. The US military has previously decided to allocate $3.5 billion to incentivize Intel to produce advanced semiconductors for defense and intelligence purposes, with $1 billion to be funded by the Department of Commerce and $2.5 billion to be funded by the US Department of Defense.
But insiders have revealed that the Pentagon cancelled this plan in the last few days before the funding deadline, and Congress can only instruct the Department of Commerce to fill this gap.
And this change may expose the funding shortage faced by the US chip program, and may also alter Intel's resource allocation plan on both military and commercial paths.
According to the original plan, Intel will receive more US government subsidies specifically for military purposes, and the defense agreement also requires Intel to become a dedicated supplier of Pentagon military and intelligence demand chips, and to establish a so-called "Secure Enclave" within Intel's factories.
Money and Politics
The special clause of safe enclave has actually caused dissatisfaction among many chip companies. Some people say that Gexin is actively lobbying against Intel becoming the only safe enclave. Some legislators are also concerned about relying on a company to manufacture sensitive cutting-edge chips for the United States.
The US Department of Commerce stated in a statement that a decision regarding safe enclave subsidies has not yet been officially made and is being evaluated through a separate process.
This is also the latest issue in the US chip program. Previously, US Commerce Secretary Raymond issued a warning about funding shortages, stating that the agency only had $39 billion available for allocation, and that over 600 companies had expressed interest in federal funding, forcing the agency to reject many companies with enormous potential.
Intel CEO Pat Gelsinger reassured in February that US government subsidies will help it achieve transformation and support its plan to build a $20 billion plant in Arizona. He also stated that the subsidy plan would be launched soon, but insiders said that Intel's subsidy plan should have been released before the Pentagon withdrew funds.
At present, there is no news to disclose whether the funds related to the safe enclave will be included in the total subsidy package issued to Intel, which may reduce the total amount of funds that Intel ultimately receives.