US chips a chunk off Intel's CHIPS grant

According to Intel, the US Commerce Department made the adjustment in light of the $3 billion Intel was awarded under a separate CHIPS Act programme in September, which will fund the development and manufacture of semiconductors specifically for the defence sector. The $7.86 billion is to fund chip production for the private sector.

The NYT had earlier reported that the decision to trim back the grant was also partly down to Intel slightly reducing the number of jobs it expects to create in Ohio – the location of two of its new factories, or fabs as they are known. However, Intel and the US Commerce Department both denied that this had any bearing on the decision.

"With Intel 3 [nanometre chips] already in high-volume production and Intel 18A [CPUs] set to follow next year, leading-edge semiconductors are once again being made on American soil," said Intel CEO Pat Gelsinger. "Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country's long-term economic growth and national security. Intel is deeply committed to advancing these shared priorities as we further expand our US operations over the next several years."

As previously reported, the expansion is expected to cost Intel $100 billion – suddenly $7.86 billion looks like a modest amount of money. Intel will spend it on new and updated fabs in Arizona; packaging facilities in New Mexico; the aforementioned two new fabs in Ohio; and expanded R&D operations in Oregon.

"The CHIPS for America programme will supercharge American technology and innovation and make our country more secure – and Intel is expected to play an important role in the revitalisation of the US semiconductor industry," said US Secretary of Commerce Gina Raimondo. "Thanks to the leadership of President Biden and Vice President Harris, our CHIPS award is catalysing Intel to make one of the largest investments in semiconductor manufacturing in US history."

Awarding Intel nearly $8 billion is a big vote of confidence for a chip maker in crisis.

In late October, Intel revealed it swung to a Q3 net loss of $16.6 billion – reported to be the biggest in the company's history. That followed a dismal second quarter, after which Intel announced it would pause dividends and shed 15% of its workforce.

Try as it might, Intel is struggling to keep pace with rivals, including the likes of AMD and Qualcomm. The former offers cheaper and cooler-running CPUs than Intel, while the latter is looking to expand beyond smartphones and make inroads into the laptop market.

In the burgeoning AI sector too, GPU maker Nvidia is winning business the world over – Intel rarely, if ever, gets mentioned.

There is a lot riding on Intel's US expansion. If the chips these fabs churn out can't compete on price and/or performance, it will all have been in vain.