Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Intel and the US government are on track to finalise $8.5bn in direct funding for the chipmaker before the end of the year, even as the company tries to stabilise its ailing business, said people familiar with the discussions.The two sides are racing to conclude months of complex and technical negotiations while Intel executes drastic cost-cutting measures. Its recent troubles have attracted attention: rival chip company Qualcomm has explored buying a stake in Intel, and there is the prospect that others could make an approach. Finalising the support package would amount to a vote of confidence in Intel from the US government even as the company pauses a major spending project in Germany to help address financial difficulties.Two people who spoke to the Financial Times confirmed the discussions were at an advanced stage, while cautioning there was no guarantee it will be finalised before the end of the year. Any takeover of all or part of Intel’s business could risk disrupting the delicate talks, they confirmed.Intel and the Department of Commerce declined to comment.If Intel were to strike a deal with Qualcomm it would be likely to attract antitrust scrutiny given that it would bring together two large players in a highly consolidated sector, who compete in the PC chip business. The companies could argue that a deal was in the interest of national security — but such arguments do not always sway US enforcers, who have built up challenges to mergers in recent years. The preliminary terms of the funding agreement were announced in March of this year. It would be the largest single subsidy package awarded through the Chips and Science Act, aimed at boosting domestic chip manufacturing and reducing reliance on Asia supply chains, which has been a cornerstone of US President Joe Biden’s policy agenda. The push to wrap up the support package comes with the November 5 election just weeks away. Biden, who will leave the White House in January, has invested much political capital in Intel and emphasised his work on boosting America’s chip-building capacity as a pillar of his record.Biden visited Intel’s Arizona plant in March to tout the provisional funding deal, which the administration says brings 3,000 manufacturing jobs and 7,000 construction jobs to Arizona — a key swing state in the election. “I wouldn’t be surprised to see the deal finalised before the elections,” one person close to Intel said.Intel’s woes stem in part from losses that have arisen from its years-long multibillion-dollar investment plan for building out its manufacturing capacity. It has failed to make up for those losses with revenue generated by PC and server chip sales on the other side of its business, or by landing enough new foundry customers.The uncertainty about Intel’s future and speculation over whether it could sell its manufacturing arm has drawn fresh attention to the US government’s continued support of Intel, which commerce secretary Gina Raimondo has called America’s “champion” semiconductor company.“All this investment talk is way too early to tell the impact it will have,” said G Dan Hutcheson at TechInsights. “But the purpose of the Chips Act was partly to make sure we kept Intel as an American company supported by the American government.”About $39bn in direct government funding under the Chips Act is earmarked to support manufacturing. Intel’s provisional $8.5bn package is the largest award to a single company, and comes with up to an additional $11bn in loans. Rivals Taiwan Semiconductor Manufacturing Co and Samsung are among other grant recipients. A separate $3bn has been allocated for Intel to build chips for the US military.Intel for its part has promised more than $100bn to finance chip plants in the US, specifically in Ohio, New Mexico, Arizona and Oregon. This would make it responsible for roughly a quarter of all the private funding that the government says it has unlocked with its incentives.On Tuesday, Polar Semiconductor was the first company to finalise its Chips Act manufacturing grant with a $123mn funding award to expand and modernise its facility in Minnesota.The political uncertainty ahead of the US election has added to the sense of urgency — particularly if Donald Trump, the Republican candidate, beats Biden’s vice-president Kamala Harris in November, given his unpredictable nature and pledge to claw back “unspent” funds from the Biden-backed Inflation Reduction Act. But David Isaacs, vice-president of government affairs at the Semiconductor Industry Association, a trade group, noted the Chips Act was “consistent with the goals of strengthening American manufacturing that both parties, both major candidates, hold”. Intel’s share price, which crashed in August as the company announced an initial round of cost-cutting measures off the back of disappointing earnings, has recovered about 15 per cent over the past five days, following reports of Qualcomm’s approach and news earlier this week that private equity giant Apollo had reached out about a potential $5bn investment. Intel has had other encouraging news recently. It said earlier this month it would build an artificial intelligence chip for Amazon using its new and most advanced “18A” manufacturing process, in what it described as a “multiyear, multibillion-dollar framework”. The companies say they will co-invest in custom chip designs.Additional reporting by Maria Heeter and James Fontanella-KhanVideo: The race for semiconductor supremacy | FT Film
