No Intel 'inside' as US Pentagon backs out of an important multi-billion dollar deal

Relying on foreign nations, notably China and Taiwan, for chip manufacturing has posed a challenge for the US in recent years. In an effort to enhance domestic chip production, the Biden administration introduced the Chips Act. However, a complication has arisen in the US government's initiative to bolster domestic chip manufacturing, affecting Intel. Unexpectedly, the Pentagon has rescinded its pledge to allocate $2.5 billion to Intel, prompting the Commerce Department to hastily address the funding gap, as reported by the South China Morning Post.

Intel was anticipating over $10 billion in total federal support, with the Pentagon initially promising to cover a significant portion. However, in a last-minute reversal, the Department of Defence opted out just before a crucial funding deadline.

To compensate for the shortfall, lawmakers are now directing the Commerce Department, which administers Chips Act grants, to find alternative funding sources within the existing program. This could result in a larger chunk of Intel's overall grant being allocated for military projects rather than commercial projects

Despite the Pentagon's withdrawal, there is a dedicated element – a "Secure Enclave" – within Intel's facilities that will still be used for military and intelligence applications. It remains to be seen whether the funding for this Secure Enclave be deducted from Intel's total award, essentially reducing the overall amount they receive, or will it be provided on top of their existing allocation.

This uncertainty may end up causing worry among other chipmakers, like Globalfoundries, who are also beneficiaries of the Chips Act. They worry that prioritising Intel's military chip production could leave them with less funding for their own commercial projects, according to the report.

The Commerce Department remains tight-lipped on the final decision regarding the Secure Enclave funding, emphasising that it's undergoing a separate evaluation process. This lack of clarity adds to the overall confusion surrounding the distribution of Chips Act funds. “The Department of Commerce looks forward to continuing to work with Congress on implementing the Chips and Science Act in a manner that promotes our economic and national security,” a department representative said in a statement.


AI Masterclass for Students. Upskill Young Ones Today!– Join Now