Intel awarded up to $3 billion from US for national security related chip production

(Reuters) -The Biden Administration on Monday awarded Intel Corp up to $3 billion from the CHIPS and Science Act to develop a "Secure Enclave" for microelectronics, which are a critical component to a wide range of weapon systems and other national security products.

Shares of Intel were up 5.7% after the announcement.

The award pushes forward the administration's commitment to re-shore semiconductor manufacturing and advance cutting-edge technology research and development.

The administration's focus on the Secure Enclave reflects a broader strategy to enhance national security through targeted investments in critical semiconductor manufacturing and technology development.

The Secure Enclave initiative is designed to ensure a secure supply of microelectronics for defense requirements, aligning with the Department of Defense's enduring need for state-of-the-art, commercial, bespoke and classified microelectronics.

"Today's announcement highlights our joint commitment with the U.S. government to fortify the domestic semiconductor supply chain and to ensure the United States maintains its leadership in advanced manufacturing, microelectronics systems, and process technology," said Chris George, president and general manager of Intel Federal.

The CHIPS Program Office at the Department of Commerce is also negotiating a separate potential award for Intel under the CHIPS Notice of Funding Award (NOFO) 1 for commercial fabrication facilities, a U.S. official said. The department is conducting due diligence, and did not address this potential award.

Intel has a history of working with the DoD, having won a second-phase contract in a project aimed at helping the U.S. military make more advanced semiconductors within the country in 2020.

In 2021, Intel was awarded a project to provide commercial foundry services for the first phase of the DoD's multi-phase program called Rapid Assured Microelectronics Prototypes - Commercial (RAMP-C).

(Reporting by Juby Babu in Mexico City and Mike Stone in Washington; Editing by Alan Barona)