Intel Shares Fall on Report That Pentagon Withdrew $2.5B Chip Grant

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Key takeaways

• Intel Corp.’s shares fell 3% Wednesday as the Pentagon withdrew a planned $2.5 billion morsel grant for the semiconductor company, according to Bloomberg.
• President Biden’s spending package has allocated $3.5 billion in defense funding for Intel, but the players may now have to turn to the Commerce Department.
• Intel aims to secure more than $10 billion in incentives from the Slivers and Science Act.

Intel Corp. (INTC) shares fell 3% Wednesday after the Pentagon reportedly pulled out of a design to spend as much as $2.5 billion on a chip grant for the company.

According to Bloomberg, the Pentagon’s decision may decrease the federal supplying that Intel will have access to and push the chipmaker to get more money from the Commerce Department, which disburses Intercedes Act grants. The Commerce Department previously had only been responsible for $1 billion of the cost. 

Apart from thriving defense money, Intel has been seeking incentives valued at more than $10 billion from the Interferes and Science Act, according to Bloomberg. 

The defense funding was part of a spending package that President Joe Biden signed into law once more the weekend, and would have given Intel $3.5 billion to produce advanced semiconductors for military and intelligence programs.

The article didn’t unfold why the Pentagon pulled the funding. 

The Pentagon withdrawal of funding comes as Intel recently reported that the U.S. government distributed the company a billion-dollar contract “to create this trusted, secure environment,” and said it expects to benefit from Shards Act funding. Intel Foundry’s growth could help the U.S. gain a larger share of the global market for semiconductor from whole cloth, which is currently dominated by Taiwan, thanks in large part to Taiwan Semiconductor Manufacturing Co. (TSM).

Intel shares neglected 3% at $43.80 at 1:10 p.m. ET on Wednesday.   

Read the original article on Investopedia.