US Government to Trim Intel Chips Funds: Will it Hurt INTC Stock?

According to media reports, the U.S. government is considering reducing Intel Corporation INTC's federal chips grant under the CHIPS and Science Act from $8.5 billion to less than $8 billion. On the condition of anonymity, various sources associated with the proceedings observed that the decision was largely because Intel had procured a $3 billion contract from the Pentagon to produce chips for the U.S. military.Intel’s delay in some of its planned investments in chip facilities in Ohio might have also influenced the purported move. The company plans to finish this project by 2030 instead of 2025.INTC’s Original Deal: A FlashbackUnder the agreement inked in March this year, Intel has the option to access federal loans of up to $11 billion, further amplifying its capacity for innovation and expansion. In addition, by availing the U.S. Treasury Department's Investment Tax Credit, Intel anticipates substantial returns on qualified investments exceeding $100 billion over five years, which is likely to fuel long-term growth and competitiveness.The funding, a crucial component of the CHIPS Act, underscored the government's commitment to enhancing domestic semiconductor production, particularly in cutting-edge technologies. This collaboration has represented one of the most substantial public-private investments in the U.S. semiconductor industry to date. Intel's CEO, Pat Gelsinger, heralded the partnership as a watershed moment, emphasizing the significance of semiconductor innovation in powering the digital revolution. The funding was poised to reinforce Intel's position as a trailblazer in technology leadership, facilitating resilient and sustainable semiconductor supply chains critical for America's future.Will the Move Impact INTC?However, with the government deciding to reduce the funding, it appears Intel has fallen down the pecking order. Intel has faced challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and affect operating and financial results.Moreover, weaker spending across consumer and enterprise markets, especially in China, resulted in elevated customer inventory levels, culminating in soft demand trends. Strict export control measures are further likely to affect the market dynamics.Intel's overarching strategy aligns seamlessly with the objectives of the CHIPS Act, focusing on process technology leadership, resilient supply chains and the development of a world-class foundry business. However, the soft third-quarter results and the proposed funding curtailment look ominous for Intel.INTC’s Zacks RankIntel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Key PicksArista Networks, Inc. ANET, carrying a Zacks Rank #2 (Buy) is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations. Workday Inc. WDAY, carrying a Zacks Rank #2, is a foremost supplier of enterprise-level software solutions for human resource and finance management. WDAY changes the way analytical insights and contributions to decision-making are made available to businesses by integrating finance and human resources as one system on the cloud. InterDigital, Inc. IDCC sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intel Corporation (INTC): Free Stock Analysis Report InterDigital, Inc. (IDCC): Free Stock Analysis Report Workday, Inc. (WDAY): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks