It seemed like good news for chip stock Intel (INTC), who was on the hook for a hefty payday from the federal government thanks to the CHIPS Act. But none of that money has showed up yet, and Intel is starting to think that this is taking a lot longer than it wanted to wait.
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Intel has invested quite a bit into its fabrication efforts, around $30 billion at last report. But the move left Intel on the back foot, sending it into a cost-cutting frenzy as it awaits an actual payment from the federal government for setting up fabrication operations in the U.S..
Intel CEO Pat Gelsinger, in an interview, said, “…we are disappointed by the time it is taking to get it done; it is well over two years since the CHIPS Act passed and over that period I have invested $30 billion in U.S. manufacturing and we have seen $0 from the CHIPS grants. This is taking too long, we need to get it finished.”
Too Big to Fail?
In Washington, D.C., there is growing concern that the company that should have received substantial cash payouts from the CHIPS Act may need more help than that. A Tom’s Hardware report noted that Intel is being regarded in some circles as “too big to fail.” This phrase essentially means that the government considers the consequences of a certain business failing to be too great for the economy to bear.
There is talk of a bailout package being prepared specifically for Intel, that will actually go beyond the terms of the CHIPS Act. While these are just plans in the works, that may never actually come to fruition, the idea that there may be a government bailout waiting for Intel might bolster investor confidence.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 23 Holds and six Sells assigned in the past three months, as indicated by the graphic below. After a 39.68% loss in its share price over the past year, the average INTC price target of $24.35 per share implies 7.91% upside potential.
