Intel awarded $8.5B in CHIPS Act funds for domestic chipmaking

Chip and PC company Intel (INTC) will receive $8.5 billion in grants from the Biden administration's CHIPS Act funds. Yahoo Finance Live weighs in on Intel's outlook for domestic chip manufacturing and its plans to build US facilities.

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: Well, the US will award Intel with up to nearly $20 billion for chip manufacturing, as part of the CHIPS and Sciences Act that breaks down to up to $8.5 billion in grants and $11 billion in loans in what commerce secretary Gina Raimondo says will be the single biggest announcement of a grant to any CHIPS recipient.

Now, shares of the chipmaker are jumping on the news. You're taking a look at Intel shares, INTC up by about 2.4% here pre-market. Two of the highlights from this that Intel pointed out, they're expecting a benefit from a US Treasury Department investments tax credit of up to 25% on more than $100 billion in qualified investments and eligibility for federal loans of up to $11 billion there, as we mentioned.

And then it also kind of adds on to what Intel had already announced with their plans to invest more than $100 billion over five years to expand US chipmaking, as we're trying to decentralize it away from what had been the fabrication process, largely to this point, of Taiwan Semiconductor and some of the other gobal foundfies.

SEANA SMITH: Yeah. This exactly goes to what Pat Gelsinger has said here at Yahoo Finance, what he has also said on recent earnings calls just in terms of the direction of Intel going forward as the company does look to regain some of that momentum that it has lost here over the last several months.

So the significance here, of course, is what this is going to mean more broadly speaking to the US chip business here in the US, as many of these chipmakers rely more heavily on US production, thanks to the funding that they are getting from the CHIPS Act from the Biden administration.

I think also, though, the question over the next couple of years is how quickly this money is going to be able to be put to work and how quickly we are going to start seeing some of the benefits from these investments because this is something that is not going to happen obviously overnight. It's going to take years to come to fruition.

So this is all part of Intel's plan. Not an exact surprise that we're seeing the stock up about 2% on this news. But, like you said, it's extremely significant. Almost $20 billion in total here with 8.5 billion in grants and then up to 11 billion in loan funding here for the future.

And obviously, the ploy here to make the US and many of its chip giants even more competitive on that global stage and bringing manufacturing back here to the US, which we know has been a priority for the Biden administration over the last several years.

BRAD SMITH: Yeah, absolutely. Very varied at least in region right now. You've got Arizona, New Mexico, Ohio, and Oregon. We were just talking about Oregon the other day. That was in the housing conversation, so separately. And I'll leave that to the side there.

SEANA SMITH: More jobs are going to be created there too.