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Intel shares benefit from prospect of billion dollar subsidies in USA |  02/20/24

Intel shares benefit from prospect of billion dollar subsidies in USA | 02/20/24

In 2022, the CHIPS and SCIENCE Act was passed to promote US semiconductor research, development and manufacturing and ensure US leadership in the field. Now chip giant Intel could benefit from a billion-dollar government funding program.

The US is considering billions in subsidies for Intel
• Funding should come from the government's billion-dollar funding program
• CHIPS Act grants have already been announced to BAE Systems subsidiary & Microchip Technology

Late last week, Bloomberg reported, citing people familiar with the matter, that the Biden administration in the U.S. was in talks to provide more than $10 billion in subsidies to U.S. semiconductor giant Intel. The commerce ministry and chip company declined to comment.

Grants from the government's billion-dollar funding program

According to the people, who wished to remain anonymous, negotiations are still ongoing. Intel's package is expected to include both loans and direct grants. However, it is not yet clear how the package will be divided into grants and loans, the people said, Bloomberg reported. Both the terms of credit and the limits set by the business sector for disbursing funds over time are up to the company.

The grants for Intel will come from a pot of funding under the CHIPS and SCIENCE Act of 2022, which includes $39 billion in direct grants and $75 billion in loans and loan guarantees, according to Bloomberg.

Encouraging investments in the United States

The government's billion-dollar plan to boost semiconductor production aims to subsidize chip manufacturing and related supply chain investments, helping to build factories and boost production.

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Since US President Joe Biden took office, chipmakers have already invested more than $230 billion in the US, according to Bloomberg. The government's target is to establish at least two leading manufacturing clusters by 2030.

Intel is also investing in America: the chip company is investing $20 billion in a plant in Ohio, a $20 billion expansion in Arizona and $3.5 billion in New York Mexico.

After Small CHIPS Act Grants: “More Big Announcements”

The Commerce Department previously announced two smaller CHIPS Act grants to BAE Systems Plc's U.S. subsidiary and Microchip Technology Inc. for facilities in New Hampshire, Oregon and Colorado, and Secretary Gina Raimondo recently announced the next six, according to Bloomberg, “a flurry” of even bigger announcements. ” within twelve weeks.

Intel shares benefit

It remains to be seen if Intel will be part of “even bigger announcements.” Either way, investors are optimistic: Intel shares temporarily rose 0.98 percent to $43.94 in U.S. trading on NASDAQ on Tuesday.

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