The Commerce Department continues its financial disbursements under the Chips Act, and Intel Corp. is seeing a premarket surge on Tuesday as investors express optimism about potential substantial funds coming its way.
Intel (INTC, +1.09%) could be in line to receive over $10 billion in subsidies, comprising both loans and direct grants, according to a late Friday report from Bloomberg News. The report indicated that discussions were underway within the Biden administration regarding this funding, which could represent the largest award from the 2022 Chips and Science Act, aimed at fortifying the U.S. semiconductor-manufacturing sector.
In premarket trading on Tuesday, Intel shares were up by 3.5%. Despite MarketWatch's request for comment, neither Intel nor the Commerce Department provided an immediate response.
Simultaneously, on Monday, the Commerce Department announced preliminary terms with GlobalFoundries (GFS, +1.07%), offering the company $1.5 billion for expanding its capacity and modernizing manufacturing sites in New York and Vermont. This development propelled GlobalFoundries shares more than 7% higher in premarket trading on Tuesday.
While the timing of a potential grant announcement for Intel remains uncertain, this week holds significance for Intel's chip-manufacturing business. The company is scheduled to host an event dedicated to its foundry business on Wednesday, with Melius Research analyst Ben Reitzes deeming it one of Intel's "most important events in recent memory."
Several years ago, Intel declared its intention to manufacture chips not only for its own use but also for other companies. Reitzes emphasized the importance of a stable domestic semiconductor supply, likening it to the strategic significance of U.S. oil reserves. Given the integration of AI technology into diverse applications, from missiles to tanks to fighter jets, he sees a long-term need for a reliable domestic foundry for AI chips.
While customer names may not be disclosed at Wednesday's event, Reitzes suggests that it might become apparent based on the attendees. He also highlighted the virtual participation of Commerce Secretary Gina Raimondo in Intel's event, speculating that discussions with Raimondo could set the stage for a substantial grant related to the U.S. Chips Act in the first half of the year.
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