“Just Seemed Overly Generous”: Intel Stock (NASDAQ:INTC) Slips as Government Reconsiders CHIPS Act Funding

In a blow that chip stock Intel (INTC) absolutely did not need right now, new reports say that the federal government is reconsidering its CHIPS Act funding, the funding that spurred Intel to build new factories in the United States. And with that reconsideration—and the distinct possibility of a refund—Intel shares slipped fractionally in Thursday afternoon’s trading.

A second look back at the Biden administration’s granting policies, viewed in the light of the present day, suggests that some of the grants just “…seemed overly generous.” That word came direct from Howard Lutnick, Secretary of Commerce for the United States. And, in turn, Lutnick noted, some of those grants have been renegotiated accordingly. Some of the deals have not, though, and Lutnick had a grim appraisal for these: “All the deals are getting better, and the only deals that are not getting better are deals that should have never been done in the first place.”

And with Intel putting up $28 billion to build processing plants in New Albany, the news comes at a particularly difficult time. So far, Intel has received $2.2 billion out of the $7.865 billion it was to receive, and $1.5 billion of that was to go to the plant in New Albany. The plant has already seen delays, and new reports suggest it will not be ready until as late as 2031.

You Must Make This Much Money to Exist

Meanwhile, yesterday, we heard that Intel Products CEO Michelle Johnston Holthaus was prepared to go elsewhere to get the products to make Intel products happen, and now, there is some clarification on that deal. A clear quantification, in fact: if new products want to get made, they have to deliver at least 50% gross profit.

If you wonder how Intel could possibly tell such a thing—and why it is bothering to make chips at all instead of simply picking winning lottery numbers out of the future instead—Intel has a plan for that. Intel will be using “…a set of industry expectations” as its measuring stick. Thus, Intel employees will not need to be precognitive to get a product off the ground, but rather, stick to the tried-and-true so hard their fingers bleed. Further, Intel is aware that it cannot predict the future, and thus, the 50% number is an aspirational figure rather than a concrete goal.

Is Intel a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on two Buys, 25 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 33.43% loss in its share price over the past year, the average INTC price target of $21.29 per share implies 5.82% upside potential.

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