So, you remember not so long ago when chipmaker Intel (INTC) was complaining about the speed at which the money from the CHIPS and Science Act was arriving at the company? And this despite a whole lot of new buildout in chip production? It may be about to get worse as new reports suggest Intel will not be getting as much cash as it thought from the CHIPS Act. But some is better than none, investors declared, and sent Intel shares up over 2% in Monday afternoon’s trading.
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The New York Times offered up a report noting that the preliminary number for Intel’s CHIPS Act funding is set to drop from $8.5 billion to just under $8 billion. The change, the report noted, was partially because Intel landed a contract worth $3 billion to produce chips for the military. It also may have considered that Intel’s planned 2025 opening of a new plant in Ohio has now been pushed back to “by the end of the decade,” the report noted.
The report also stated that “Intel’s technology road map and customer demand” played a factor in the reduced grant payout. The Commerce Department also had a set of “milestones” involved in the disbursement of funds, including building plants, producing chips, and getting customers to buy in on products that had been produced within the United States. With these points looking a little less sure than they once were, that may have contributed to plans to pare back the grant amount.
The Great Intel Fire Sale, Extended
But in what may have been the unkindest cut, Intel—who is in line for billions in taxpayer dollars, recently announced plans to sell its Folsom campus near Sacramento. A report from Fox 40 revealed the plan, with Intel noting that it was “…part of a company-wide mission to reduce the amount of unused space and foster greater in-person collaboration.”
Intel will not be abandoning Folsom altogether, reports note, as it plans to lease some of that space back following a sale. But with Intel laying off 272 employees at Folsom as part of its broader layoff plan, on top of the 750 employees it laid off from Folsom in 2023, it likely did not need so much space anyway.
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 42.44% loss in its share price over the past year, the average INTC price target of $24.43 per share implies 2.82% downside risk.
