Intel is said to qualify for $3.5B in military chip grants (NASDAQ:INTC)

Intel (NASDAQ:INTC) officially qualified for as much as $3.5 billion in federal grants to make semiconductors for the Pentagon, Bloomberg News reported, citing people familiar with the matter.

After reaching a binding agreement with U.S. officials, the chipmaker will participate in the secretive program called Secure Enclave. It aims to set up production of advanced chips for military and intelligence services.

Intel (INTC) was the frontrunner for the award, but other chipmakers objected amid concerns that the Pentagon is too reliant on a single company. There also was a fight among several agencies and Capitol Hill that threatened to reduce Intel’s (INTC) funding.

The agreement may be announced as soon as next week, Bloomberg News reported. The funding would add to $8.5 billion in grants and $11 billion in loans that Intel (INTC) received in March through the Chips and Science Act. President Joe Biden in 2022 signed the law to help the domestic chip-building industry and reduce reliance on Asia.

Intel (INTC) is still hammering out the terms of the broader incentive package that’s intended to support facilities in Arizona, Ohio, New Mexico and Oregon. The company hasn’t received any money yet, and its award is considered preliminary.

Intel shares were little changed in late trading Friday after Bloomberg News reported on the deal. The stock had been down 61% this year to $19.66 a share as of the close.