Intel's Shares Rise Amidst Potential $3.5 Billion Chip Deal with Pentagon

Intel's Shares Rise Amidst Potential $3.5 Billion Chip Deal with PentagonIntel Shares Rise Following Potential $3.5 Billion Chip Deal With Pentagon Intel, an American chipmaker, has seen a slight increase in its shares during premarket trading. This comes after a Bloomberg report on Friday evening suggested that the company might secure up to $3.5 billion in federal grants to manufacture chips for US military and intelligence applications. The report was based on sources who are familiar with the chipmaker's binding agreement with US officials. According to them, the secretive Pentagon program, known as 'Secure Enclave,' awarded Intel $3.5 billion. This move by the military aims to produce chips domestically, particularly in several states, including a facility in Arizona. More Information from Bloomberg The funding could be announced as early as next week, according to the anonymous sources. This would add to a potential $8.5 billion in grants and $11 billion in loans that Intel received in March under the Chips and Science Act. This law, signed by President Joe Biden in 2022, was designed to revitalize US semiconductor manufacturing and reduce reliance on Asia. Intel is still negotiating the terms of this broader incentive package, which is intended to support facilities in Arizona, Ohio, New Mexico, and Oregon. Like other Chips Act winners, Intel has not yet received any money, and its award is considered preliminary. The funding for Secure Enclave also comes from the Chips Act grant program administered by the Commerce Department. This follows a dispute earlier this year over which agency would be responsible. However, this was handled outside of the standard application process. Intel's Current Struggles The agreement on Secure Enclave comes amidst a difficult period for Intel under CEO Pat Gelsinger's leadership. Gelsinger has been trying to turn the company around, but with little success so far. Last month, the struggling chipmaker reported a disappointing earnings report and revenue forecast that resulted in a significant drop in shares. So far this year, Intel's shares have fallen nearly 61% (as of Friday's close). However, shares are up around 2% in premarket trading in New York. Intel's turnaround plan includes cost-cutting measures like selling businesses, such as the programmable chip unit Altera. According to a source from Reuters, Intel can no longer support this due to its dwindling profits. Gelsinger's plan to rescue the company will be presented to the company's board as early as this week. Bottom Line Intel's potential $3.5 billion deal with the Pentagon could provide a much-needed boost for the struggling chipmaker. However, it remains to be seen whether this will be enough to turn the company's fortunes around. What are your thoughts on this development? Do you think Intel can recover from its current struggles? Share this article with your friends and let them know what you think. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.

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