The New York Times reported that the Biden administration is planning to reduce an initial promise of $8.5 billion in federal chip Act grants to Intel because Intel has delayed its investment projects and the company's business has struggled.

Intel's $8.5 billion grant will be cut to $8 billion, according to four people familiar with the matter. The sources spoke on condition of anonymity because they said a final contract had not yet been signed. The change takes into account a $3 billion contract Intel has already received from the U.S. Department of Defense to produce chips for the U.S. military.

Intel has already delayed part of its planned investment in a chip manufacturing facility in Ohio, which is expected to be completed before 2030 instead of 2025 as originally planned. Intel recently experienced the largest single-quarter loss in its history, putting the company under intense pressure to cut costs.

The New York Times pointed out that the Biden administration's adjustment also took into account Intel's technology roadmap and its market performance. While Intel has been trying to boost its technological capabilities to catch up with SMC, it has yet to fully convince customers that its technology can match TSMC's.

By comparison, the U.S. Department of Commerce announced on Nov. 15 that TSMC would receive $6.6 billion in grants, a decision made during the Biden administration.

According to the plan, the Commerce Department is working to complete the signing of several key grant contracts before President Biden leaves office on January 20, 2025. Under the America on the Chip Act, the U.S. government set aside $39 billion in direct grants, $75 billion in loans and loan guarantees, and a 25 percent tax credit. Although most of the funds have been allocated, the exact timetable for the actual implementation of the account is still being determined.

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