According to Bloomberg News, Intel has qualified for up to $3.5 billion in federal grants to produce advanced semiconductors for the U.S. Department of Defense (DOD) as part of a secretive program known as Secure Enclave.

This initiative aims to boost domestic production of advanced chips for military and intelligence applications.

Although the U.S. invented the semiconductor, it currently produces only about 10% of the world’s supply—and none of the most advanced chips. Instead, it relies on East Asia for 75% of semiconductor production. 

The funding is part of the broader Chips and Science Act, which U.S. President Joe Biden signed into law to support semiconductor manufacturing in the U.S. and reduce dependence on foreign supply chains.

After a complex negotiation process, Intel, long seen as the frontrunner for this funding, reached a binding agreement with U.S. officials. However, the deal faced resistance from other chipmakers and Washington insiders concerned about relying too heavily on a single firm for military-grade semiconductors.

As the only U.S.-based company capable of producing advanced chips, Intel emerged as the preferred choice despite recent financial struggles that caused doubts about its turnaround plan under CEO Pat Gelsinger.

The Secure Enclave program spans several states, with key facilities in Arizona playing a central role in the effort. This latest funding announcement builds on the $8.5 billion in grants and $11 billion in loans Intel secured in March under the Chips Act, which aims to revive U.S. semiconductor production.

The Department of Commerce is administering the funds for Secure Enclave, which operates separately from Intel’s commercial production initiatives.

Although the specific chip models Intel will produce under this program remain unclear, the company’s role highlights the U.S. government’s urgency in securing a domestic supply of critical semiconductors.

The deal also highlights Intel’s unique position in the U.S. chipmaking landscape, as competitors like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. are foreign-owned despite building facilities on American soil.