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Less than a week after the Biden administration formally awarded Intel the largest grant under its signature CHIPS and Science Act, the semiconductor maker’s longtime CEO is out, and some experts are calling the shots on the government for sending huge amounts of taxpayer dollars to the company. hard.
Scott Lincicome, vice president of general economics and trade at the Cato Institute, told FOX Business in an interview that this situation raises a lot of red flags, especially because the Commerce Department’s award to Intel of about $8 billion follows the company’s $3 billion defense contract. came in September – and now the chief architect of the company’s turnaround plan, Pat Gelsinger, has reportedly been forced to step down due to mismanagement.
Intel CEO Pat Gelsinger shows President Joe Biden a processor and semiconductor wafer during a tour of the Intel Ocotillo Campus in Chandler, Arizona, on March 20, 2024. (BRENDAN SMIALOWSKI/AFP via Getty Images/Getty Images)
“Couple that with concerns that the Biden administration has been rushing to release these ‘Trump-proof’ grants in the past. [President-elect] Trump takes office in January, and it looks like old industrial policy,” Lincicome said.
A Cato expert acknowledged that there is still plenty of time for Intel to get the ship ready and delivered, but says the situation is not looking good. He worries that the US government may be willing to treat Intel – the country’s largest semiconductor maker – as Too Big to Fail, and do whatever is necessary to keep the company afloat.
INTEL’S FINANCIAL STRUGGLES AT THE TOP OF BIDEN ADMIN CHIP STRATEGY
Lincicome says that could lead to worse decisions down the road, such as finding other subsidies, new protections and costs, and potentially bad investment decisions from the company itself.
Intel was awarded $7.865 billion in federal grants last Tuesday, and its longtime CEO stepped down over the weekend. (Photos by Reuters/Dado Ruvic/Illustration/Reuters)
| A ticker | Security | Finally | Change | change % |
|---|---|---|---|---|
| INTC | Company INTEL CORP. | 23.93 | -0.12 |
-0.50% |
Finance attorney John Alper of the Alper Law firm, says awarding Intel $8 billion in CHIPS Act funding would have always been a tough move, and he admits it’s especially risky given the company’s recent financial and operational problems.
Alper says that from a financial perspective, this level of funding needs to come with strong accountability measures, and that the government should ensure that these funds are tied to significant progress in domestic semiconductor production.
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“While Intel’s problems raise legitimate concerns, the broader goal of reducing reliance on foreign chipmakers is important,” Alper said. “If the funds are managed well and lead to a strong US semiconductor industry, it can still be a worthwhile investment despite the risks.”
Arm Holdings CEO Rene Haas breaks down the impact of the downgrade cycle and considers the Chips Act in ‘Claman Countdown.’
Cody Moore, a partner and consultant at Wealth E&P, says he is not convinced that awarding Intel was a good use of taxpayers’ money, saying the move appears to reward a company that has struggled to keep up with its rivals.
“However,” Moore told FOX Business, “the hope is that this investment will help to revive their production, create jobs, improve economic growth through domestic semiconductor production, and reduce our dependence on foreign production – especially given the importance of chips in supporting Boom.”
Thomas J. Cryan, a tax historian and attorney, says assessing the value and effectiveness of taxpayer dollars, specific to the CHIPS Act, and investments in semiconductor manufacturers like Intel, depends on several competing factors.
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He says the tension must be balanced between wanting to keep the US supply chain secure for these necessary products, allowing the free market to produce real efficiency regardless of the consequences, supporting a critical company during a challenging time to manage and operate it, and accounting. important state-funded companies in China that have found a niche in the technology market.
“On balance,” said Cryan, “it may work to give Intel a significant contract, given the 10-year US strategy.”
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