Biden administration to reduce Intel’s $8.5B CHIPS Act grant: report (update)

Update: The deal to provide Intel with $8B in funding is close to being finalized, CNBC reported, citing a person familiar with the matter.

The Biden administration is planning to reduce Intel’s (NASDAQ:INTC) preliminary $8.5B CHIPS Act funding grant, the biggest award under the initiative, to less than $8B, four sources told The New York Times.

The change in the grant, which is not yet finalized, factors in a $3B contract offered to Intel (INTC) to produce chips for the U.S. military. It also takes into account the chipmaker’s technology roadmap and demand for its products.

Intel’s (INTC) initial CHIPS award comprised of about $20B in grants and loans, including up to $8.5B in direct funding to support its projects in Arizona, New Mexico, Ohio and Oregon.

Companies with CHIPS awards had to meet certain milestones set by government officials to get the funds, including building a plant in the U.S. and signing up customers for the locally produced chips.

But Intel (INTC) delayed some planned investments in the Ohio chip factories amid market challenges, with plans to finish that project by 2030 instead of 2025.

The Biden administration has been rushing to finalize CHIPS Act awards and start handing out the allocated funds. It recently finalized the grant for Taiwan Semiconductor Manufacturing (TSM).