Financial Partner News, November 1st (Editor Liu Rui) Over two years ago, the usa introduced the "Chip Act", hoping to encourage the development of the domestic chip industry in the usa through substantial subsidies. intel, as the only American-owned advanced logic chip manufacturer, was supposed to be the biggest beneficiary of the federal funding under the "Chip Act".

However, two years have passed,$Intel (INTC.US)$but they have not received a single penny. At a time when intel's performance is poor and the market cap has plummeted, the subsidies provided by the Biden administration should have been a lifesaver, but they have yet to materialize. This has led intel's CEO to openly complain recently.

Intel CEO: Disappointed with the "Chip Act"

After the close of trading on Thursday Eastern Time, intel CEO Pat Gelsinger revealed that they have still not received the originally promised tens of billions of dollars from the "Chip Act".

Although he reiterated that intel will still continue to push for the opening of chip manufacturing plants in Ohio and Arizona, his statement also barely concealed his disappointment:

"Overall, we consider the "Chip Act" to be a very important matter, we have invested a considerable amount of time and effort into it, as we have said on our earnings call, we are disappointed about the time it is taking to complete this Act."

"The "Chip Act" has been in effect for over two years. During this time, I have invested 30 billion dollars in American manufacturing, and we have received zero benefits from the "Chip Act". It has taken too long, we need to complete it."

The money from the 'Chip Act' is nowhere to be found.

In August 2022, the USA introduced the '2022 Chip and Science Act' (referred to as the 'Chip Act'). The Act claims to provide $52.7 billion to subsidize the USA semiconductor industry. In addition to direct subsidies, the US Congress has also approved $75 billion in government loan authorizations.

Under the call of massive government funding support, Intel CEO Gelsinger has pledged to invest over $100 billion to expand operations in Arizona, Ohio, New Mexico, and Oregon.

However, two years have passed, and the massive funds promised by the Biden administration's 'Chip Act' are still nowhere to be seen.

Since the beginning of this year, due to Intel's failure to catch up with the AI ​​boom, Intel's stock price has fallen by over 50%, and its market cap has also dropped below $100 billion, making it the worst-performing tech giant.

According to Gelsinger, during the company's current 'worst' financial period, the Biden administration has yet to deliver the promised $8.5 billion in factory construction subsidies.

In addition, Intel was supposed to receive $11 billion in loans and up to $25 billion in tax credits, but these financing schemes have not yet been approved.

What is the Biden administration hesitating about?

In fact, it is the recent deterioration of Intel's business that has caused concern in the US Congress.

Although Galen Sig said that he will continue to invest in the USA, Intel announced layoffs of 0.015 million people last quarter and postponed plans to establish a large factory in Ohio, all of which have exacerbated concerns of some US government officials, worried about whether Intel can fulfill its promises, and also worried that the huge subsidies distributed will eventually "go down the drain".

Former Commerce Department official Caitlin Legacki said that the US government also has a concern that "Intel will take chip funds, build an empty shell factory, and then never really start operations because they have no customers."

Indeed, the concerns of the US government are not unfounded, as Intel has had a history of this kind in the past.

In 2012, Intel once boasted to the then US President Obama that it would invest $5 billion in building a semiconductor manufacturing plant in Arizona. However according to two former Intel employees, although Intel built the building at that time, the factory remained vacant because there were not enough customers, and it was not until several years later that Intel put the machines into operation.

Therefore, despite the Biden administration's commitment to allocate $8.5 billion in direct funding subsidies to Intel, the funds have not yet reached Intel's hands. Instead, the US government has set certain milestones for companies receiving subsidies, including Intel, requiring them to meet benchmark objectives—such as building facilities, producing chips, or signing customers—before they can receive partial funds.

Like most companies, Intel has not yet received the first installment of this program. According to sources, Intel has been arguing with the government in recent months about the milestones that must be reached before receiving funds.

"The most frightening situation is that you make a big bet and lose," said Peter E. Harrell, a researcher at the Carnegie Endowment for International Peace and former chip project leader at the White House, "people who have seen this naturally feel worried."

Over the past year, intel has been struggling. Recently, Gal Singh expressed his frustration in an interview about the waiting process for the 'chip act' subsidy.

"Both sides are renegotiating," Kissinger said. "I just want to say, 'Let's get this done.'"

Editor/ping