Intel Inches Closer To $3.5B Contract To Build Secret Fabs For Uncle Sam

Intel is on track to receive $3.5 billion in US CHIPS Act funding to produce advanced semiconductors for American military and intelligence programs.

The chipmaker has been a top contender for the cash with rumors swirling since November that the x86 giant would receive anywhere from $3-$4 billion. This funding, siphoned from the overall $39 billion in CHIPS and Science Act allotment,  would presumably support the development of a "secure enclave," which we understand to be a separate production line dedicated to military chip production.

According to Bloomberg the $3.5 billion will be dispersed over the next three years. The news was tucked away in a spending bill passed by the US House of Reps Wednesday, and will cement Intel as the leading producer of silicon for the defense market.

However, it's not like Uncle Sam had much of a choice if it wanted to keep production of military silicon in the US. Intel is so now the only American chipmaker producing leading edge silicon domestically.

New York-based GlobalFoundries abandoned development of 7nm and smaller process tech back in 2018 in order to focus on more mature and niche process tech in areas like radio communications, imaging, optical, automotive, industrial, and IoT.

Even still, many of GlobalFoundries' processes still have military applications, with the company still in early deliver on a 10-year $3.1 billion DoD contract to produce semiconductors for aerospace and defense applications awarded last fall.

That leaves Taiwan's TSMC and South Korea's Samsung Electronics, which are building fabs in Arizona and Texas, as the only other US producers of leading edge chips. However, in this case, it seems that the US government would rather entrust its secrets to American companies.

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It's also worth noting that Intel has longstanding relationships with the Department of Defense and the Department of Energy. These collaborations have included the production of prototype multi-die chips including a super-threaded graph analytics accelerator.

The company's Xeon and GPU Max processors are also at the heart of the Department of Energy's Aurora Supercomputer.

The $3.5 billion in funding is only the tip of the iceberg. Intel is expected to receive well in excess of $10 billion in grants and loans from the Department of Commerce to help finance a massive build of foundry capacity in Arizona and Ohio.

Despite an appearance at Intel's Foundry Direct event last month, Commerce Secretary Gina Raimondo has yet to reveal just how the major foundry operators will receive. She did however warn that of $28 billion up for grabs, chipmakers would be lucky to get less than half of what they've requested. ®