Intel says new $3 billion government deal reflects 'continued progress' of its foundry business
Semiconductor stocks are weak on Monday, but Intel Corp. shares are a rare bright spot.
That hasn't been the case much recently, as Intel's stock (INTC) has struggled this year. It's down 60% so far in 2024, ranking as one of the worst performers in the S&P 500 SPX over that span, while the PHLX Semiconductor Index SOX is ahead 17%.
Intel shares are up 4.3% on Monday as the PHLX Semiconductor Index is down 1.7%.
Opinion: Intel's big turnaround plan is now looking very expensive and poorly timed
Intel's stock is one of only four gainers in the PHLX Semiconductor Index as of Monday afternoon, with the other being Lattice Semiconductor Corp. (LSCC) That stock is up 12.4% upon the announcement of a new chief executive whose arrival should "put to rest recent investor concerns about additional management departures," according to Raymond James analyst Srini Pajjuri.
What's behind Intel's stock move? The company confirmed Monday afternoon that it has been granted up to $3 billion in Chips Act funding to "expand the trusted manufacturing of leading-edge semiconductors for the U.S. government." Specifically, this award covers defense work.
Bloomberg News reported after the close on Friday that Intel had notched a deal to make semiconductors for the U.S. military.
This deal is separate from the roughly $20 billion in funding that Intel announced earlier this year it was eligible for through the Chips Act.
Intel has been struggling lately to gain credibility for its foundry arm and to boost its cash position as it deals with disappointing business trends. While artificial intelligence has catalyzed many high-profile semiconductor stocks, Intel has admitted that it hasn't benefited from the trend as much as expected. The company recently announced it was suspending its dividend and embarking on a sizable layoff plan.
"Today's announcement reflects the continued progress of Intel Foundry, which brings together all the components customers need to design and manufacture chips at the leading edge," Intel said in Monday's release.
See also: Intel's stock hasn't been this cheap in at least 30 years. But is it a buy?
-Emily Bary
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