The Commerce Department’s ongoing efforts to disburse funds under the Chips Act are fueling optimism among investors, leading to a surge in premarket trading for Intel Corp. on Tuesday.
According to a report from Bloomberg News late Friday, Intel (INTC, +1.09%) stands to potentially receive over $10 billion in subsidies, including loans and direct grants. Discussions within the Biden administration regarding this funding indicate its significance, possibly representing the largest award under the 2022 Chips and Science Act, aimed at strengthening the U.S. semiconductor manufacturing sector.
Intel shares experienced a 3.5% increase in premarket trading on Tuesday. Despite requests for comment from MarketWatch, neither Intel nor the Commerce Department immediately responded.
Meanwhile, the Commerce Department announced preliminary terms with GlobalFoundries (GFS, +1.07%) on Monday, offering the company $1.5 billion for expanding capacity and modernizing manufacturing sites in New York and Vermont. This news propelled GlobalFoundries shares over 7% higher in premarket trading on Tuesday.
This week holds significance for Intel’s chip manufacturing business as it is set to host an event dedicated to its foundry business on Wednesday. Melius Research analyst Ben Reitzes regards this event as one of Intel’s “most important events in recent memory.”
Intel had previously announced its intention to manufacture chips not only for its use but also for other companies. Reitzes stressed the importance of a stable domestic semiconductor supply, likening it to the strategic significance of U.S. oil reserves. With AI technology being integrated into various applications, from missiles to tanks to fighter jets, there is a long-term need for a reliable domestic foundry for AI chips.
While specific customer names may not be disclosed at Wednesday’s event, Reitzes suggests that attendees may provide clues. He also pointed out the virtual participation of Commerce Secretary Gina Raimondo in Intel’s event, speculating that discussions with Raimondo could pave the way for a substantial grant related to the U.S. Chips Act in the first half of the year.
