US Government Drops CHIPS Act Requirements for Intel After Taking Equity Stake
Intel is no longer bound by the majority of the requirements and milestones it originally agreed to under the CHIPS Act. This significant change comes as the US government has taken a direct stake in the company, fundamentally altering the nature of the financial support.
According to a company filing, Intel can now receive its allocated government funding simply by demonstrating it has already spent 7.9 billion dollars on the projects outlined in its initial deal with the Commerce Department. Reports indicate the company has already spent 7.87 billion dollars on these eligible projects, meaning it is very close to meeting this new, simplified condition.
The shift in terms removes several major obligations for the chipmaker. Intel is no longer required to share a percentage of the total cumulative cash flow from each project with the Commerce Department. Furthermore, the company is freed from adhering to many of the CHIPS Acts specific workflow policy requirements and other restrictions. A key prohibition remains in place, however. Intel is still barred from using the government funds for dividend payments or to repurchase its own stock.
This new arrangement stems from a recent high-level decision. The government opted to take a ten percent equity stake in Intel, moving away from the original grant and loan structure of the CHIPS Act agreement. This change followed a meeting between former President Donald Trump and Intel CEO Pat Gelsinger. Trump had previously publicly called for the CEOs resignation, but the meeting resulted in a new agreement. Trump characterized the outcome as securing a ten billion dollar investment for the United States.
Intel subsequently confirmed the US government would make an 8.9 billion dollar investment in Intel common stock. This equity purchase is composed of the 5.7 billion dollars previously set aside for Intel under the CHIPS Act, with an additional 3.2 billion dollars awarded through a separate program known as the Secure Enclave.
Intel has already received a substantial portion of these funds. The companys CEO confirmed that it received the 5.7 billion dollar payment from the government. This capital infusion, combined with 2.2 billion dollars in CHIPS Act grants previously awarded to Intel, brings the total financial involvement from the US government to 11.1 billion dollars. This move represents a significant pivot in how the government is choosing to subsidize and support domestic semiconductor manufacturing, favoring direct investment over conditional grants.
