Pentagon to Manage Intel’s Latest $3 Billion Grant Under CHIPS Act

In the two years that have passed since President Biden signed the Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, money from the program has gone to boost chip-making efforts at numerous smaller businesses as well as big names like Texas Instruments and HP. Industry observers have already tallied up some benefits of the effort, but now there’s news of another payout to one of the best-known names in tech: Intel.

The chipmaker has been awarded $3 billion. Industry news site DefenseNews explains the investment will be managed by the Department of Defense (DoD) in partnership with the Commerce Department. It’s actually the second time Intel has been helped by funds coming from the CHIPS and Science Act, but for a different purpose: in March the company revealed it had been awarded $8.5 billion in a first-of-its-type grant to a company planning to make more advanced chip designs, versus simply boosting existing technology.

The new money, Intel says in a press release, is intended to help expand “the trusted manufacturing of leading-edge semiconductors for the U.S. government.” The award is actually under what’s called the “Secure Enclave” program, Intel explains, which builds on previous partnerships between the chipmaker and the DoD. Intel is the “only American company that both designs and manufactures leading-edge logic chips,” the company insists, and the money will “help secure the domestic chip supply chain” and “enhance the resilience of U.S. technological systems by advancing secure, cutting-edge solutions.”

Simplifying this corporate-speak it appears the DoD is concerned about the security implications of using foreign-made computer chips in sensitive military equipment like communications gear or fighter jets like the F-35. The concerns may be due to supply chain worries, such as a foreign source being able to withhold supply of critical chips for political capital, or due to high-tech spying concerns. If a more trustworthy U.S.-based chipmaker like Intel can be guided to make sure it’s developing the right sort of “cutting edge” chips on time and at the right price for the DoD, so much the better. 

Reporting on the CHIPS award, DefenseNews notes that just 12 percent of the global microchip supply rolls out of U.S. factories, down from a figure of around 37 percent in the 1990s. Currently most of the globe’s chip supply is sourced in Taiwan and China. Some of the world’s most advanced chips now come from companies like the Taiwan Semiconductor Manufacturing Company, which now makes super-advanced chips for Apple’ iPhones and Mac computer. This switch was deemed a snub to Intel since Apple used some of Intel’s chips in Macs until it realized it could make more efficient computers using rival tech–the change to Apple’s own chips began in 2020 and was completed in 2023.

Increasingly tense relations between the U.S. and China in part revolve around technology, highlighted by a 2019 controversy that featured American government efforts to block imports of technology from Chinese giant Huawei, and the more recent, still ongoing TikTok saga. In April U.S. Commerce Secretary Gina Raimondo made a point of downplaying the apparent power of chips in Huawei’s latest home-produced smartphone, arguing they weren’t as advanced as U.S.-made chips. 

Intel, meanwhile, has been faltering of late. Once a jewel of U.S. chipmaking, the company lost its grip on the cutting edge of chip manufacturing some years ago. Though the company is making a push for the fast-growing AI industry and supports Microsoft’s plan to turn the humble office PC in to an “AI PC,” Intel’s finances have been shaky. At the start of August it laid off 15,000 workers, about 15 percent of its workforce, to combat revenue decline.

The new CHIPS money should go some way to reversing these worrying trends.