Chipmaker Intel (INTC) was looking for a good slug of free taxpayer dollars from the CHIPS Act to help defray the costs of its new chip plants and foundry aspirations. And now, the checks will apparently start rolling out, just weeks before they may have been put in jeopardy with the arrival of the Trump Administration in a little over six weeks. But the amount that will hit is lower than expected, and Intel shares dove nearly 4% in Tuesday afternoon’s trading as a result.
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We heard yesterday from the New York Times that the amount offered was likely to drop from its original $8.5 billion to just under $8 billion. And indeed, that was where it went, to its new level of “up to $7.87 billion,” noted a Wall Street Journal report. As we noted yesterday, the amount was cut as Intel landed other government funding, particularly from the Pentagon, which engaged Intel in making some chips.
This is part of a larger program on the Biden administration’s part, the report noted, to hand out billions of dollars in grants to manufacturers before the Trump administration can kick in for a second time.
Qualcomm Shying Away
Intel finally getting its CHIPS Act money will be welcome news because a Bloomberg report also noted that Qualcomm (QCOM) is not as interested as it once was in acquiring Intel. Interest in the deal is apparently cooling off, though there is still a possibility that Qualcomm will come back, either seeking to pick up all or just a few pieces of Intel.
It certainly did not help matters that such a deal certainly would have passed through a gauntlet of government scrutiny. Given the makeup of the Federal Trade Commission (FTC) at the time, particularly under the leadership of Lina Khan, that was a valid concern. It is not likely that the FTC will be quite as aggressive under Trump, but even laissez-faire may not go so far as to cover a deal as big as Qualcomm buying Intel.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 22 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 45.03% loss in its share price over the past year, the average INTC price target of $24.43 per share implies 2.15% upside potential.
