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Concerns grow in Washington over Intel

Updated: 01-11-2024, 09.41 PM

Policymakers in Washington have grown worried enough about chipmaker Intel to begin quietly discussing scenarios should it need further assistance, beyond the billions in government funds the company is already slated to receive, people familiar with the matter said.

A strong quarterly earnings outlook yesterday bought the company breathing room with investors, but abstract concerns in Washington have turned into potential backup options, should Intel’s finances continue to deteriorate.

Top officials at the Commerce Department, which oversees implementation of the CHIPS Act funding to reinvigorate American chip production, and members of Congress including Sen. Mark Warner, one of the law’s leading champions, have discussed whether the company needs more help, the people said.

The talks, which the people described as purely precautionary, show that Intel is seen as too strategically important to be allowed to fall into serious trouble. The US is seeking a national champion in the semiconductor space to ensure its own supply chain and as a counterweight to China, where manufacturing for global chips has moved.

“We have outlined a clear strategy that we are executing with rigor, and the strong operational performance we delivered in Q3 demonstrates important progress against our plan,” an Intel spokesperson said in a statement. “Intel is the only American company that designs and manufactures leading-edge chips and is playing a critical role to enable a globally competitive semiconductor ecosystem in the US.”

One option is a merger, led by the private sector but possibly encouraged by the government, of Intel’s chip-design business with a rival like AMD or Marvell, the people said. There’s little appetite for a 2008-style bailout, in which the government took direct stakes in automakers and banks, because policymakers are worried about losing money given Intel’s continued sales declines.

Intel is set to be the biggest recipient of government funding under the CHIPS Act, which aims to help American manufacturers of key tech components build their products in the US and compete with China. The company is slated to receive $8.5 billion in grants and $11 billion in low-interest loans; these funds would not be part of any further assistance, should Intel need one.

But Intel hasn’t received any of that CHIPS money yet amid doubts about its prospects. Bloomberg reported that the company has been reluctant to share certain information sought by US officials tasked with ensuring that the company has a viable turnaround plan.

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