Intel Secures $57 Billion Early, Removes Project Milestones in CHIPS Act Deal

Intel Corporation has announced a significant modification to its agreement with the U.S. Department of Commerce regarding the semiconductor funding under the CHIPS Act. The company has successfully negotiated to remove the previously set project milestones, thereby securing approximately $57 billion in cash ahead of schedule. This move is expected to enhance Intel's financial flexibility.

The revised agreement, based on the initial financing agreement from November 2024, retains certain restrictive clauses. These include prohibitions on using the funds for dividend payments, stock buybacks, specific changes in controlling stakes, and business expansions in certain countries. As part of the agreement, Intel has issued 274.6 million shares to the U.S. government, with an additional option for the government to purchase up to 240.5 million more shares under specific conditions.

Intel has placed 158.7 million shares in a trust account, which will be released once the government allocates more funds under the CHIPS Act for the "Secure Enclave program," aimed at expanding advanced chip manufacturing capabilities. The company has already invested at least $78.7 billion in projects that meet the funding criteria of the CHIPS Act.

The U.S. government's investment of $89 billion, combined with the $22 billion in subsidies Intel has already received, brings the total government support to $111 billion. Intel's Chief Financial Officer, David Zinsner, highlighted during a recent investor meeting that the government's stockholding plan is essentially an incentive to encourage Intel to maintain control over its contract manufacturing business, also known as the foundry business.

This strategic move by Intel underscores the company's proactive approach to securing financial resources and enhancing operational flexibility. By removing the project milestones and gaining early access to a substantial amount of cash, Intel is better positioned to navigate the competitive landscape of the semiconductor industry. The company's commitment to investing in projects that align with the CHIPS Act's objectives further demonstrates its dedication to advancing U.S. semiconductor manufacturing capabilities.