Intel gets US$3 billion support from US government

Business news | September 17, 2024

By Peter Clarke

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The US government has awarded US$3 billion directly to struggling chip company Intel Corp. under the CHIPS and Science Act.

The award, which some see as a life-line for Intel, has been made under an obscure sub-program of CHIPS called Secure Enclave. Secure Enclave is designed to expand trusted manufacturing of leading-edge semiconductors for the US government and the Department of Defense (DoD), Intel said.

Secure Enclave, administered by the DoD, has funds of US$3.5 billion that were diverted from the US$52 billion CHIPS and Science Act funding pot, which is administered by the Department of Commerce (DoC).

Intel stressed that Secure Enclave builds on previous projects between Intel and the DoD such as Rapid Assured Microelectronics Prototypes – Commercial (RAMP-C) and State-of-the-Art Heterogeneous Integration Prototype (SHIP).

Intel is also expecting to receive up to US$8.5 billion in funding under the CHIPS act to support the construction and modernization of wafer fabs in Arizona, New Mexico, Ohio and Oregon. However, that funding is on hold while the Department of Commerce does due diligence following Intel’s announcement of 15,000 job cuts and cuts to its capital expenditure.

Intel slashes jobs, capex as results disappoint

Some observers have said that the diversion of funds from a public tender process run by the DoC into a classified hand-out from the DoD supporting a single company, should not have happened. In May 2024 an article in Politico quoted Democratic party Representative Zoe Lofgren, ranking member of the House Science Committee, saying: “There should be no Secure Enclave in the CHIPS program and any secure program that might be necessary should be funded by the Department of Defense … not from CHIPS funding that should be focused on revitalizing our domestic chip capacity.”

After the announcement of the US$3 billion award Chris George, president and general manager of Intel Federal, said in a statement: “Intel is proud of our ongoing collaboration with the US Department of Defense to help strengthen America’s defense and national security systems.”

In the same statement Intel asserted that announcement reflects the progress made by Intel Foundry, the company’s manufacturing arm. It said Intel’s 18A manufacturing process is “on track” for production in 2025.

In 2021, Intel was awarded an agreement to provide commercial foundry services for multiple phases of the DoD’s RAMP-C program, which aims to leverage US-based commercial semiconductor foundries to produce custom and integrated circuits for critical DoD systems. Intel said that since then it has become the foundry supplier for several US companies that work on defense projects including Boeing, Northrop Grumman, Microsoft, IBM, Nvidia and others.

Meanwhile Intel CEO Pat Gelsinger has announced that Intel’s manufacturing operation will be set up as independent subsidiary company with its own “operating board” but that still reports to him.