As the global semiconductor industry undergoes rapid changes, Intel, once an industry giant, is facing unprecedented challenges. Recent news indicates that the nearly $20 billion subsidy promised to Intel by the US government under the CHIPS and Science Act may be delayed due to a series of complex factors, casting a shadow over the future of this tech giant.

The Promise and Reality of Subsidies

In March of this year, Intel and the US Department of Commerce signed a hopeful memorandum, marking the official launch of the largest subsidy under the CHIPS and Science Act. A direct allocation of nearly $8.5 billion, coupled with a loan commitment of up to $110 billion, was undoubtedly a significant support for Intel's expansion of chip manufacturing facilities in the United States. However, this funding was not easily obtained. Intel had to undergo rigorous due diligence to prove its ability to fulfill its initial promises and investment plans.

Declining Performance and Increased Scrutiny

Reality, however, dealt a heavy blow to Intel. The second-quarter 2024 financial report was like a bucket of cold water, with a net loss of $1.654 billion, particularly the huge loss in the foundry business, causing the market to worry about its future. This decline in performance not only shook investor confidence but also drew the deep concern of the US government. Faced with such difficulties, Intel had to accept stricter scrutiny to ensure that it could effectively utilize the subsidy funds and revitalize its chip manufacturing business.

Intel Layoffs and the Road to Self-Rescue

To address the financial crisis, Intel took decisive action to save itself, launching an unprecedented wave of layoffs globally. The departure of approximately 15,000 employees, accounting for 15% of the company's total workforce, reflects Intel's determination to cut costs. At the same time, by suspending dividends and cutting expenses, Intel is striving to find a way to survive in adversity. However, whether these measures can effectively alleviate its financial pressure and give it more time to prove its value remains uncertain.

Scrutiny from Both Government and Market

Faced with Intel's difficulties, both the US government and the capital market have expressed varying degrees of concern. On the one hand, the US government is cautious about whether Intel can successfully use the subsidy funds to reshape the chip manufacturing industry. On the other hand, the capital market is full of doubts about Intel's future development, as evidenced by the continued decline in its stock price. In addition, rumors about the spin-off or sale of the foundry business have further fueled market anxiety.

Intel's Appeal and Market Speculation

In closed-door meetings, Intel actively urged the US government to accelerate the disbursement of subsidy funds. It emphasized its investment commitments in the United States and its efforts to build advanced process capacity for semiconductors, hoping to finalize the agreement as soon as possible and receive the first batch of funds. However, market players are pessimistic. They believe that considering Intel's upcoming cost-cutting plan, which may impact its investment plans in the United States, it is unlikely that the subsidy funds will be actually in place by the end of 2024.

Conclusion

Intel's subsidy dilemma is not only a turning point in its own destiny but also a microcosm of the changing landscape of the global semiconductor industry. In this battle without gunpowder, can Intel, with its own efforts and government support, emerge from the difficulties and regain its glory? Time will tell. In this process, we will also witness the ups and downs of the semiconductor industry and the rise and fall of giants.

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