The Biden administration seems to be speeding up, distributing important laws within this term to provide a big 'red envelope' to companies before Trump, who questions the chip act, takes office.

On Monday, November 25th, Eastern Time, CNBC reported, citing sources familiar with the matter, that the office responsible for implementing the '2022 Chip and Science Act' (referred to as the 'Chip Act') is about to be established. $Intel (INTC.US)$ and is about to reach an agreement to allocate approximately 8 billion US dollars in subsidies to Intel, which will be used for Intel's factory construction. The U.S. Department of Commerce is expected to finalize this allocation in the coming weeks.

In addition to the above $8 billion allocation, intel also received up to $3 billion in funding in September this year under the chip act for producing chips for the Department of Defense.

The US Department of Commerce and intel both declined to comment on the new allocation. intel's stock price maintained an upward trend on Monday, reaching a high intraday increase of nearly 4.4%, which later narrowed to around 2%.

If the above report is accurate, the final chip act allocation approved by the US Department of Commerce has also been 'scaled down'. Last Sunday, the new york times reported that sources revealed, considering intel previously obtained a $3 billion contract for producing chips for the military, the Biden administration plans to reduce the initial allocation for intel from the announced $8.5 billion in March this year to $8 billion.

According to the report, the decision to reduce the allocation is related to intel postponing some planned investments in building a chip factory in Ohio. intel's new $20 billion fab in Ohio was originally scheduled to start production in 2025, next year, but the production schedule is now expected to be delayed to 2027 to 2028.

The Biden administration's budget cuts are said to have also taken into account intel's technology roadmap and customer demand. Intel has been working hard to improve its technical capabilities, catching up with competitors like Taiwan Semiconductor, but has always struggled to convince customers that it can match Taiwan Semiconductor's technology.

Over a week ago on November 15th, the U.S. Department of Commerce announced the final agreement signed with Taiwan Semiconductor, providing $6.6 billion in government subsidies for chip production at its Arizona subsidiary under the chip act. This is a significant allocation finalized since the chip act was introduced in 2022. It has led investors to speculate that the Department of Commerce will also formally allocate subsidies to intel, while also speculating that the Biden administration may make a rush allocation before Trump takes office.

Just a few weeks before the Department of Commerce and Taiwan Semiconductor reached an agreement, Trump questioned the chip act in an interview at the end of October before the election. He told podcast host Joe Rogan that the government's way of encouraging companies to produce chips in the U.S. should be through tariffs on imported chips, rather than providing funding like the chip act.

Trump said at the time: “The chip agreement is too weak. I see that we have spent a lot of money bringing people (to the U.S.) to make chips, this is not a solution. You don't necessarily have to pay a financial cost. You can achieve this through a series of tariffs.”

Last week, The Wall Street Journal reported that U.S. government officials are rushing to provide promised billions of dollars in chip act-related subsidies to companies like intel. Out of the $39 billion allocation under the chip act, the Department of Commerce has tentatively identified to allocate the majority, but nearly $30 billion of it is tied up in complex government negotiations, leaving the fate of these agreements uncertain as Trump is about to take office.

The report mentioned that the Department of Commerce's goal is to complete as many of these allocations as possible in the next two months before Trump takes office. U.S. government and business leaders have stated that completed allocations are legally binding and cannot be withdrawn in the future without congressional approval of a bill.

Editor / jayden