Pentagon Awards Massive $3.5 Billion Contract to.... Intel? (Didn't Have That On My Bingo Card)

Finally… FINALLY, Intel Corp. just pulled off a massive win. Of course, it’s not an Nvidia level of win, but it’s definitely a big mood booster nonetheless. Word on the street (read: people familiar with the matter) is that Intel secured $3.5 billion in federal cash to manufacture high-end semiconductors for the U.S. military. The program, dubbed "Secure Enclave" (because of course, it's gotta sound mysterious), is all about bringing chip production back home for military and spy stuff. Think chips, but for the Pentagon.

(Source: Bloomberg) 

As everyone can imagine, this is a pretty big vote of confidence from Uncle Sam, especially considering Intel’s recent faceplants. And by faceplants, I mean a series of earnings reports, and failures to grapple a competitive stance in the AI race that has made shareholders question if they should've just bought that Bitcoin dip instead. 

(Source: Reddit) 

But now, Intel has officially snagged the Secure Enclave bag to set up a new facility in Arizona. Because nothing screams "national security" like making your chips in the middle of the desert (think, Area 51). The goal with this new contract is to produce the next-gen chips that the military and intelligence agencies need for their cool toys (read: classified tech), that ultimately keeps Americans safe at night, and keeps our enemies in check (hopefully). 

(Source: Anjuna) 

That said, the road to getting this deal wasn’t exactly smooth with flying colors. Prior to the signed and filed contract, there has been plenty of bureaucratic bickering over who should handle the program as Intel’s competition wasn’t too jazzed about this whole thing. Rival chipmakers threw their hats in the ring too, but Intel, being the last big U.S.-based chipmaker, had the edge.

(Source: Giphy) 

Of course, had this taken place a few years ago, when Intel was still the chip king, this contract would’ve been a no brainer on who to give it to. But, just like me, a guy who peaked in high school, Intel has been struggling to keep up with the sign of the times in the tech space. 

As we all know, (and are tired of hearing of this utter catastrophe), Intel’s stock has spiraled to the depths of Tartarus - down -61% this year after a series of bad earnings and burnt reputation. Which ultimately has had investors questioning CEO Pat Gelsinger’s whole game plan with Intel and whether or not he’s actually fit for the job. 

(Source: CNBC) 

Especially considering the fact that Gelsinger has failed to keep his promises of an aggressive comeback with new factories all over the globe - as Intel is now rethinking its global domination plans. Spoiler: they’re more likely to pump the brakes on international projects rather than bail on their new U.S. plants in Arizona and Ohio. ‘Merica first, amirite?

(Source: Giphy) 

Additionally, let’s not forget that Intel has already scored $8.5 billion in grants and $11 billion in loans under the Chips and Science Act earlier this year. And now, another $3.5 billion is headed their way like a lifeline tossed to a drowning man. The Chips Act, by the way, was designed to bring chip manufacturing back to the U.S. and cut the cord on America’s chip addiction to Asia. 

But still, why Intel you ask? Well like mentioned above, Intel was pretty much the only option in a sense. For instance, thanks to a series of unfortunate events (cough AMD exiting manufacturing cough), Intel is the last U.S. company still making the kind of cutting-edge chips the military needs.

(Source: Wired) 

Sure, TSMC and Samsung—those foreign chipmaking giants—are setting up shop in the U.S. with some help from the Chips Act, but the Pentagon doesn’t want to rely on chipmakers whose HQs are closer to North Korea than Washington, D.C. It’s not a trust thing... okay, maybe it is a trust thing.

(Source: Giphy) 

So clearly, this deal is a much-needed shot of adrenaline for Intel. But here’s the thing: winning military contracts sounds great on paper, but they can be a real pain in the a$$ to deliver on. Just ask the companies who were part of the Pentagon’s "trusted foundry" program. Translation: they struggled to meet the military’s demands and didn’t exactly make bank from it. So, yeah, Intel’s celebrating now, but they’ve got their work cut out for them. 

Plus, with that said, Intel still has to negotiate final terms for the $19.5 billion incentive package they were awarded back in March. Meaning, exactly what it sounds like… Intel hasn’t even touched a dime of those billions yet because, well, bureaucracy.

(Source: Fortune) 

In the end, what’s my take on the matter? Well, simply put, it’s no secret that Intel has the Pentagon in its pocket for now, but this deal also feels like a double-edged sword. On one hand, $3.5 billion is a much-needed boost. On the other, it’s not like Intel has a stellar track record lately. This is either the start of a major recovery or just another chapter in Intel’s list of false hope that no one asked for. 

(Source: Giphy) 

Now of course only time will tell what happens. And while I can’t help but root for Intel (everyone loves an underdog story), I wouldn’t hold my breath too much. 

In fact, speaking of failure… we at Stocks.News have failed. 

You see, our Stocks.News premium alert on Thursday only reaped a bleak 96% peak move in less than 48 hours. However, while we were definitely hoping for more to end the week, our premium members were losing their collective minds over this massive win! 

(Source: Giphy) 

Which is why, due to the fact that recent data is now showing us a seismic 61.80% SHORT-INTEREST on this little known stock, 96% gains could end up being chump change come tomorrow morning! Meaning, if you want to ensure you’re in on the action… click here for ASAP for the details. 

In the meantime, stay safe and stay frosty this Saturday! Until next time…

Stocks.News holds positions in Intel as mentioned in the article.