Intel Bags $3.5B Contract To Produce Chips For Pentagon: Report

Intel Corp. INTC has reportedly secured a $3.5 billion contract to manufacture semiconductors for the U.S. military.

What Happened: Chip maker Intel has been granted up to $3.5 billion in federal funds to produce advanced chips for military and intelligence use, reported Bloomberg, citing people familiar with the matter.

The deal is part of the Secure Enclave program, including the Arizona manufacturing facility.

Despite opposition from rival chipmakers and concerns from Washington about the prudence of depending on a single company, Intel emerged as the preferred choice for this contract. 

See Also: Intel Board Member Lip-Bu Tan Reportedly Left After Disputes With CEO And Other Directors Over Company’s Direction

The funding announcement could be announced as early as next week, the report noted, citing the sources.

This contract adds a potential $8.5 billion in grants and $11 billion in loans that Intel received in March under the Chips and Science Act.

Intel is still in talks regarding the terms of this broader incentive package, which is intended to support facilities in Arizona, Ohio, New Mexico, and Oregon. 

Why It Matters: Intel’s reported deal with the Pentagon comes after the tech giant secured over 7.4 billion Polish złoty ($1.91 billion) in state grants to support the construction of a new chip plant in Poland.

According to reports, the European Commission will distribute the grant between 2024 and 2026.

Intel also intends to achieve cumulative software revenue of $1 billion by the end of 2027, according to the company's CTO Greg Lavender. Last year, the company’s overall revenue was $54 billion.

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