Intel Finalizes CHIPS Funding as Qualcomm Backs Away from Acquisition

The U.S. Department of Commerce has awarded Intel $7.86 billion in funding under the U.S. CHIPS Act, confirming yesterday’s story. But a separate report says that Qualcomm, which was recently interested in acquiring the struggling microprocessor maker, has reconsidered because of the complexities associated with the deal.

“The CHIPS for America program will supercharge American technology and innovation and make our country more secure–and Intel is expected to play an important role in the revitalization of the U.S. semiconductor industry,” U.S. Secretary of Commerce Gina Raimondo said. “Thanks to the leadership of President Biden and Vice President Harris, our CHIPS award is catalyzing Intel to make one of the largest investments in semiconductor manufacturing in U.S. history.”

The $7.86 billion award is less than the $8.5 billion Intel could have received, but it’s more than offset by a separate $3 billion in funding for the Secure Enclave program that was awarded in September. Intel now says that today’s award, coupled with a 25 percent investment tax credit, will help it complete its $100 billion investment in U.S.-based chipmaking facilities. The firm says that these efforts will result in over 10,000 company jobs, almost 20,000 construction jobs, and over 50,000 indirect jobs with suppliers and supporting industries.

“With Intel 3 already in high-volume production and Intel 18A set to follow next year, leading-edge semiconductors are once again being made on American soil,” Intel CEO Pat Gelsinger says. “Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country’s long-term economic growth and national security. Intel is deeply committed to advancing these shared priorities as we further expand our U.S. operations over the next several years.”

According to the U.S. Department of Commerce, the reduced funding wasn’t triggered by Intel missing deadlines. Instead, it was reduced because of “a congressional requirement to use CHIPS funding to pay for the $3 billion Secure Enclave program.”

Separately, Bloomberg reported that Qualcomm, which as recently as September expressed interest in acquiring all or part of Intel—twice, actually–has had second thoughts. Citing multiple sources, Bloomberg says that “numerous financial, regulatory and operational hurdles,” not the least of which was assuming $50 billion in Intel debt, made the deal too complex. And the acquisition would have faced a rocky antitrust review in multiple jurisdictions worldwide, of course.

“Right now, at this time, we have not identified any large acquisition that is necessary for us,” Qualcomm CEO Cristiano Amon semi-confirmed on Bloomberg TV, though he was speaking of the company’s expansion into new markets for chips for PCs, networking equipment, and automobiles, which could raise its annual revenues by as much as $22 billion in the coming years.

As for Intel, Mr. Gelsinger believes that keeping Intel whole is the key to its future success.

“Obviously, there’s a lot of attention on Intel, which just reinforces what a central role it plays in the technology industry,” he said during a separate Bloomberg interview. “We believe distinct, but better together, is the strategy.”