Intel To Reduce Property Holdings Just As It Finalizes $8B CHIPS Act Grant To Build Factories
Even as it closes in on billions in government deals, Intel is reducing its property holdings, announcing it intends to sell a 150-acre California campus and consolidate other locations to cut expenses amid sluggish sales.
The chipmaker isn’t planning to close its Folsom, California, property, which features seven buildings and 1.6M SF of labs and offices for around 5,000 employees, but the company is looking at using the site more efficiently, according to a report from The Oregonian.
“We are exploring more cost-effective space usage options for Intel’s Folsom site, including a partial lease back of our current space,” Intel officials said in a statement.
The company is also considering options for the future of its 50-acre property in Hillsboro, Oregon, and it is working to consolidate its headquarters in Santa Clara, California, though it hasn’t released specific details of what that would entail.
“We are shifting our global real estate strategy to focus on fewer, more populated locations and eliminate underutilized space,” company officials said in the statement. “This approach will foster greater in-person collaboration at our largest sites while also delivering cost savings for the company.”
As it shifts real estate strategy, the chipmaker is said to be in the process of finalizing a deal for an $8B grant with the CHIPS Act Office to fuel expansion. The Biden administration is working to distribute the funding before the end of the president’s term, CNBC reported.
While the grant was initially announced at $8.5B earlier this year, government officials decided to reduce the grant by around $500M because they were unsure whether Intel could deliver on its investments in chip facilities in Ohio, according to The New York Times. Instead of finishing that project next year, Intel now expects it to conclude before the end of the decade.
The company has received tax breaks from the CHIPS Act grant but is still waiting for the funds to be disbursed.
“We’re frustrated that hasn’t moved faster,” Intel CEO Pat Gelsinger told CNBC last month. “They’ve been too bureaucratic in that process. We’re anxious to see those finished.”
The CHIPS Act grant would be used to build factories. Intel is also up for a $3B contract to manufacture chips for the Department of Defense. The latter deal was announced in September.
Intel has seen its sales drop by more than 30% since 2021, and it reported its largest quarterly loss in company history in the third quarter at $17B, CNBC reported.
The 56-year-old company has also seen the market for its data centers and microprocessors drop off. Taiwan Semiconductor Manufacturing Co. has overtaken Intel on the computer chip production front. The company received its own $6.6B CHIPS Act grant earlier this month.
As part of Intel's plan to reduce costs by $10B, the company eliminated 15,000 jobs through layoffs and buyouts in the fall. Intel then raised its forecast for the remainder of 2024, noting it was on the way toward financial stability.
