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In a busy news morning for struggling chip maker Intel (INTC), the New York Times has reported that the U.S. government is planning to cut INTL's grant to under $8.0 bln from the initial preliminary amount of $8.5 bln. The grant, which originated from the CHIPS and Science Act, will help bridge a wide funding gap as INTC continues to embark on an ambitious U.S. manufacturing expansion plan that will require over $100.0 mln in capital to build factories in Ohio, Arizona, and New Mexico. According to the report, the decision to reduce the grant is related to the $3.0 bln award INTC received from the U.S. government in September to produce advanced chips for the Department of Defense. 

• However, it's also plausible that INTC's ongoing woes played a role in the government's decision to hold back some capital. Earlier this year, the company announced that its Ohio plants were delayed by an additional two years, extending production until no earlier than 2027. Since then, INTC's quarterly results have been disappointing to say the least as it has fallen even further behind NVIDIA (NVDA) and Advanced Micro Devices (AMD) in the AI data center market. Cost-cutting actions, including the elimination of 15,000 jobs, and the suspension of its quarterly dividend have followed the poor results.
• The stock is shaking off news of the grant reduction, though, as investors focus on a pair of more positive developments. First, Bloomberg reported that Lattice Semiconductor (LSCC) is considering making an offer for INTC's full Altera unit, which makes chips used in telecom networks. INTC had been planning to sell a minority stake in Altera in an effort to streamline its operations and raise more capital, but for the right price, the company may divest the whole business.
• Private equity firms Bain Capital, Francisco Partners, and Silver Lake are also reportedly looking into a possible bid. It's unclear how much Altera could fetch, but it's worth noting that INTC purchased Altera for about $17.0 bln in 2015. In 3Q23, revenue for Altera plunged by 44% yr/yr to $412 mln. Given Altera's weak recent results, INTC will most likely have to take a sizable haircut on a deal, but the injection of capital from the sale would be viewed as a positive overall.
• Lastly, INTC also announced that it plans to sell and lease back its Folsom, California site in a move that will help the company save more money and generate cash from its real estate portfolio. The facility, which is home to approximately 5,000 employees, would remain fully operational after the transaction.

The main takeaway is that while the reduction in the federal grant is a disappointment, when taken together, this morning's news events indicate that INTC may be poised to generate and free up more capital to be allocated to its manufacturing expansion strategy.