Intel shares rise premarket on report of $3.5 billion US military chip deal

Investing.com -- Shares in Intel (NASDAQ:INTC ) rose on Monday after Bloomberg News reported that the US chipmaking giant had officially qualified for as much as $3.5 billion in federal grants to make semiconductors for the Department of Defense.

Citing people familiar with the matter, Bloomberg in a report published on Friday said that Intel had reached a binding agreement with US officials.

The deal is part of a secretive program dubbed Secure Enclave that is seeking to set up the production of advanced chips with military and intelligence applications, Bloomberg reported.

The funding, which had faced pushback from other chipmaking firms as well as concerns from lawmakers in Washington, may be announced as soon as this week, Bloomberg said.

Intel was previously awarded grants and loans possibly worth billions of dollars by the Chips and Science Act, which US President Joe Biden signed into law in March. The bill was part of a wider effort by the White House to reinvigorate the American chipmaking sector and reduce the influence of Asian players.

The terms of the package, which aims to boost facilities across several US states, are still being negotiated by Intel. The company has yet to receive any funds from the government.

Intel, the Commerce Department and the Pentagon all declined to comment, Bloomberg reported.

Intel's stock price has plunged by more than 58% so far this year, as the firm struggles to keep up with rivals like Nvidia (NASDAQ:NVDA ) in the race to manufacture artificial intelligence-optimized chips. In August, Intel said it plans to slash capital expenditures by 17% versus the prior year to $21.5 billion, and unveiled a third-quarter forecast that missed analysts' estimates.

It has also announced cuts to more than 15% of its workforce, or roughly 17,500 people, and said it would suspend its dividend in the fourth quarter as part of a broader turnaround effort.

Source: Investing.com