Semiconductor manufacturer Intel Corporation (NASDAQ:INTC) is a frontrunner in a bid to secure a multibillion-dollar funding package from the US government’s $53 billion CHIPS and Science Act, according to a Wall Street Journal report.
The contract would see Intel constructing chipmaking facilities – called foundries, or semiconductor fabrication plants – to produce cutting-edge microchips for military and intelligence applications.
Intel is one of the only US entities with the capacity to manufacture sophisticated microchips, but its expertise falls significantly behind Samsung in South Korea and the Taiwan Semiconductor Manufacturing Company.
However, microchip autonomy has emerged as a major ambition for the Biden administration amid geopolitical tensions between China and Taiwan.
Chip foundries are incredibly expensive endeavours, costing upwards of $20 billion to construct the most bleeding-edge of plants.
This expense has driven the market towards an oligopoly of just a handful of state-backed entities in East Asia.
US Commerce Secretary Gina Raimondo has described microchip autonomy as a “national security investment”, making big-ticket subsidies a necessary expense.
Intel would benefit greatly from winning such a contract.
Under chief executive Pat Gelsinger, the seminal California-based tech company has dedicated considerable capital to building out its foundry business in hopes of attracting high-profile clients like Nvidia Corporation and AMD, who currently send their designs off to Taiwan for printing.
In turn, Nvidia, AMD and other major US chip designers could benefit from onshoring their semiconductor manufacturing partnerships.
According to the WSJ report, representatives from the Department of Commerce, the Office of the Director of National Intelligence, and the Department of Defense are currently in discussions with Intel regarding the project, but a final decision has yet to be made.
Alongside these funding rumours, reports have emerged that Intel has postponed a significant investment in Vietnam, which would have substantially expanded its operations in the Southeast Asian country.
This decision is a setback for Vietnam, which is trying to become a key player in the semiconductor industry and reduce reliance on China and Taiwan.
Insiders mentioned concerns over Vietnam’s power stability and bureaucratic hurdles as potential reasons for Intel's withdrawal.
Intel has yet to publicly explain the cancellation.