$3.5 Billion: US Govt Set to Invest in Intel to Produce Advanced Chips for Military and Intelligence

Introduction:

In a strategic move, the United States government is set to invest a substantial $3.5 billion in Intel Corp., a leading chipmaker, aimed at bolstering the production of Intel advanced semiconductor chips dedicated to military and intelligence programs.

This significant funding, incorporated into a swiftly progressing spending bill passed by the House on Wednesday, not only propels Intel into a dominant position within the lucrative defense market but also fortifies the nation’s efforts to establish a robust semiconductor manufacturing ecosystem on home soil.

Secure Enclave Program for Intel Advanced Chips:

The allocated funds, slated to run over a three-year period, are designated for the “secure enclave” program.

This initiative is part of the broader $39 billion Chips and Science Act grant pool, strategically crafted to incentivize chipmakers to manufacture semiconductors within the United States.

Notably, more than 600 companies have expressed their interest in securing a portion of this funding, underscoring the critical importance of semiconductor production in the current global landscape.

The funding, which would run over three years, is for the “secure enclave” programme. The Senate is expected to pass the legislation by a Saturday deadline.

Intel’s Windfall and the Chips Act Incentive Package:

As reported by the Wall Street Journal in November, Intel was already in negotiations for government subsidies ranging between $3 billion and $4 billion under the program.

This investment adds to Intel’s substantial Chips Act incentive package, exceeding $10 billion, which includes a combination of grants and loans.

Despite the reported figures, Intel has remained tight-lipped, declining to comment on the impending $3.5 billion infusion.

Commerce Department’s Stance on Intel Advanced chips:

The Commerce Department acknowledges the significance of the appropriations but maintains a cautious stance, stating, “We are still reviewing the effect of the appropriations text on the program.” The department expresses eagerness to collaborate with Congress in implementing the Chips and Science Act in a manner that prioritizes both economic and national security.

Legislative Progress and Saturday Deadline:

With the House having passed the spending bill, attention now turns to the Senate, expected to pass the legislation by a looming Saturday deadline. .36The timeline underscores the urgency and bipartisan support for initiatives aimed at bolstering domestic semiconductor production.

Commerce Department Awards and Concerns:

Simultaneously, the Commerce Department is preparing to announce multi-billion-dollar awards to other advanced chipmakers, including Intel’s Asian rivals, Taiwan Semiconductor Manufacturing Co. and Samsung.

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.

These awards align with the overarching goal of fostering domestic manufacturing capabilities. However, concerns raised by key senators, including Maria Cantwell, Roger Wicker, and Jack Reed, highlight the intricacies of awarding funds to a single company for building a secure enclave.

Last year, Senators Maria Cantwell, Chair of the Commerce Committee, along with Roger Wicker and Jack Reed, respectively the leading Republican and Democrat on the Armed Services Committee, expressed reservations. They questioned the rationale behind awarding a single company with the task of constructing a secure enclave, particularly at a potentially inflated cost compared to alternative methods of ensuring chip security, as indicated by aides familiar with the matter.

Separation from Defense Department Programs:

It’s crucial to note that this initiative operates independently of existing Defense Department programs focused on identifying secure facilities for military chip supply.

GlobalFoundries and IBM are among the firms supplying chips through the existing Defense Department program.

Additionally, the Pentagon has separately allocated $238 million to eight regional technology hubs with a focus on semiconductors for defense applications.

Conclusion:

The proposed $3.5 billion investment in Intel reflects a significant stride in the United States’ mission to bolster its semiconductor manufacturing capabilities, especially in the realm of defense.

As the legislative process unfolds, the collaboration between government and industry will play a pivotal role in shaping the trajectory of domestic semiconductor production, impacting national security and economic resilience.

Intel’s pivotal role in this endeavor underscores the company’s strategic importance in the evolving landscape of advanced technology and security.