Intel Corp.’s stock got a lift Wednesday from news that the company is due to receive billions of dollars in federal funding through the bipartisan Chips and Science Act, though not all of the morning gains for the stock stuck.
Shares closed up 0.4% after jumping more than 2% at the open. The main U.S. stock indexes SPX DJIA also finished higher, as the Federal Reserve indicated it still expects three cuts to interest rates this year.
The Department of Commerce has struck a preliminary deal with Intel INTC, +0.36% that will provide the company with up to $8.5 billion in direct funding and $11 billion in loans through the Chips Act. The money will support construction and expansion of facilities in Arizona, Ohio, New Mexico and Oregon, according to a White House statement.
President Joe Biden visited an Intel campus in Chandler, Ariz., on Wednesday to talk up the agreement. The Biden White House estimated that Intel’s efforts will lead to the creation of almost 30,000 jobs, while “supporting tens of thousands of indirect jobs.”
As chips become ever more critical to powering society, there’s been growing awareness of the geopolitics behind them, including China’s huge role. While the semiconductor SMH SOXX supply chain is global, the Biden administration and Republican lawmakers have been pushing for more U.S.-made chips.
“If we invent it in America, it should be made in America,” Biden said as he delivered a speech in Chandler, which is in the Phoenix area. The president said he wants to “make sure we never again are in a position where, during a pandemic, we’re relying on other countries to make things that we badly need here at home.”
From MarketWatch’s archives (July 2022): Biden signs into law $280 billion package for chips, scientific research — here’s what’s in the bipartisan measure
Unlike many of its rivals, Intel not only designs chips but also manufactures them. The company is in the process of kickstarting its foundry business, through which the company plans to make chips for other companies.
Intel is getting “access to more money than we expected,” said analysts at Melius Research, as they assessed Wednesday’s announcement.
The White House’s preliminary agreement with Intel is its fourth under the Chips Act, and also the largest. The government previously announced agreements with GlobalFoundries Inc. GFS, +2.24%, Microchip Technology Inc. MCHP, +1.21% and BAE Systems PLC BA, +0.64%.
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