The deal also reflects a lack of other options for the Biden administration: Pentagon officials have insisted on sourcing cutting-edge semiconductors from an American company, and Intel is the only US maker of advanced processors. Other manufacturers include Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co., both of which are building plants on American soil with Chips Act support.
Some Washington officials have had early conversations about buying chips from the US facilities of foreign makers, Bloomberg has reported, but those talks are focused on broader procurement guidelines and are separate from the Secure Enclave program.
It’s unclear exactly what models of chips Intel would produce for the Pentagon. The Santa Clara, California-based company, which operates both a design business and a manufacturing one, still relies on TSMC to produce some of its most advanced processors.
Intel has struggled to convince potential customers like Nvidia Corp. and Advanced Micro Devices Inc. of its product capabilities. Commerce Secretary Gina Raimondo encouraged both firms to consider manufacturing at the facility Intel is building in Ohio, Bloomberg has reported, but neither currently plans to do so.
Intel has announced that other companies, including Microsoft Corp., are exploring the idea of using it to produce their chip designs. Those efforts haven’t yet resulted in large orders or significant revenue.
For chipmakers, the Pentagon can be a difficult customer. A recent report from the National Academies of Sciences, Engineering and Medicine found that companies involved in a so-called trusted foundry program — a longstanding effort that’s similar to Secure Enclave but focuses on older-generation chips — often struggle to meet Defense Department requirements or generate a return on investment from those orders.