In an all-hands, Intel CEO addresses employee concerns about the US election and CHIPS Act funding
I-HWA CHENG/ Getty Images
- An Intel employee raised concerns about the upcoming US election's impact on CHIPS Act funding.
- Intel invested billions in US factories but hasn't received CHIPS Act grants yet.
- Nvidia is replacing Intel in the Dow Jones, signaling Intel's declining influence.
Intel CEO Pat Gelsinger addressed an employee-submitted question about whether the upcoming US election would affect Intel's CHIPS and Science Act funding at an all-hands meeting on Friday.
The US Commerce Department has awarded Intel, the largest recipient of the Act, $8.5 billion in grants and $11 billion in loans. The government said it will pay out grants based on how companies meet benchmarks.
During the all-hands, Gelsinger responded that the bill was "bipartisan," and the executive team reassured employees that Intel was a key part of the CHIPS Act as the only large-scale chip manufacturer in the US, according to an employee who listened to the meeting. The employee, whose identity Business Insider confirmed, asked to remain anonymous to discuss internal matters.
Intel has privately invested billions in factory expansions in New Mexico, Arizona, Ohio, and Oregon. It has not yet received the CHIPS grants.
Gelsinger publicly addressed this topic in a Thursday interview with Bloomberg after the third quarter earnings call.
"The CHIPS Act was a bipartisan act, and with that strong support from both sides of the aisle, we believe the importance of that in terms of industrial policy. The semiconductor is well-supported by Congress and both parties," Gelsinger said.
He also addressed the delay of CHIPS Act funding distribution.
"We are disappointed by how long and how slow the dispensing of funds has been and it's well over two years at this point. I've invested 30 billion in capital and we've seen $0 of the grants at this point. So we do believe that that has been too slow, and we're somewhat frustrated by that," Gelsinger said in the Bloomberg interview.
Policymakers recently in Washington, DC, have discussed whether Intel needs additional help beyond the CHIPS Act funding as a precautionary measure, as Intel's success is key to evolving American manufacturing policies, Semafor reported.
Government leaders are also monitoring the CHIPS Act funding delays. Ohio governor Mike DeWine said Wednesday that he contacted the White House to ask it to speed up the distribution of funding from the CHIPS Act for its New Albany factory.
The CHIPS Act was passed largely in a bipartisan fashion in 2022. Stephen Ezell, the vice president for global innovation policy at the Information Technology and Innovation Foundation and the director of its Center for Life Sciences Innovation, previously told BI he expects no "considerable change" in approach whether presidential candidates Kamala Harris or Donald Trump are elected.
Besides the delay in receiving CHIPS Act funds, Intel has faced a series of setbacks to its business. The S&P Dow Jones Indices said Friday that Nvidia would replace Intel in the Dow Jones Industrial Average. This change indicates that Intel is no longer seen as a stable economic indicator.
Intel's recent profitability was "negatively impacted" by cost reduction changes as the company is "maniacally focused on improving fab productivity," Gelsinger said during its third-quarter earnings call.
Amid a challenging financial adjustment, Intel is relying upon the success of its 18A chip. In the past, the company has faced customer losses and delays in its 14-nanometer and 10-nanometer chips due to yield issues.
Intel plans to reduce spending with a cost-savings plan and has cut staff by 15%.
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