The US administration stretched the conditions of the CHIPS law for Intel. Previously determined targets and process rules have lost their validity. The most important reason for this is that the government is directly common to Intel. Thus, the company had the opportunity to use state support in more comfortable conditions.
According to Wall Street Journal, Intel will be entitled to receive funds in case of documenting at least 7.9 billion dollars of spending within the scope of the agreement signed with the Ministry of Commerce. The company has recorded an appropriate expenditure of $ 7.87 billion so far. This has actually opened the way for state support. In addition, Intel is expected to focus on production investments. All these developments directly affect the company’s financial plans.
The relationship between Intel and the United States is now more flexible
Intel no longer has to share some of the total cash flow it provides from projects with the Ministry of Commerce. In addition, some business processes envisaged under the CHIPS law have been disabled. But the government’s certain restrictions continue. The Company will not be able to use the funds for dividend payments or purchases of stocks. The purpose of this limitation is to ensure that resources are directed directly to production.
With the decision it took in the last period, the US administration went to the way to purchase Intel’s 10 percent stake. Thus, the direction of the first draft agreement was changed. President Donald Trump called for resignation to Lip-Bu Tan, Intel CEO, and this call opened the door to critical talks between the parties. At the end of the meeting, Intel will contribute to the US 10 billion dollars. This step created a new balance in the relations of the parties.
According to Intel’s new investment plan, the government will invest a total of $ 8.9 billion. $ 5.7 billion of this amount will be provided from the previously reserved funds in the CHIPS program. The remaining $ 3.2 billion will be transferred within the framework of the Secure Enclave security program. Thus, state support will not be reflected not only in production but also in the field of security. This development will affect Intel’s strategic priorities.
Intel CEO David Zinser, recently announced that the fund of $ 5.7 billion has reached the company. In addition, Intel had previously received a $ 2.2 billion grant under the CHIPS law. In total, the US government’s contribution to the company increases to $ 11.1 billion. This amount represents a rare support size in the global semiconductor sector. The direct partnership of the state increases the impact of this figure.
The use of funds focuses mainly on new factory investments. Intel’s giant facility projects in Arizona and Ohio are at the center of this support. In addition, the company’s new facility initiatives in Europe will be able to get a share of funds. All of these investments closely concern the balance of global competition. Therefore, Intel’s steps are gaining importance not only for the US but for the world.
Although the size of the funds provided is remarkable, Intel’s success will not be measured only with state support. The productivity that the company will capture in production processes will determine its position in competition. It has to increase its production capacity in the face of strong competitors such as TSMC and Samsung. At this point, the effective use of funds will play a critical role. Eyes will be at the speed of Intel’s adaptation to new generation technologies.
On the other hand, this decision of the US gives a strong message to other semiconductor manufacturers. The flexible conditions provided by the government to Intel may pave the way for similar steps. Such a scenario has the potential to influence the balances of the global market. Especially in the competition with Asian -based companies, this approach can have different results. For this reason, Intel’s success is important not only for itself but also for the USA.