Intel’s stock is climbing — here’s why

Intel’s (INTC) stock hasn’t had the best yearbut its shares closed on a high on Monday after news that it is eligible for more funding under the U.S. Chips and Science Act.

The chipmaker’s shares closed up 6.3% on Monday at $20.91. During after-hours trading, its stock soared by over 10%. However, Intel’s shares are down around 56.2% so far this year.

On Monday, the U.S. Department of Defense and U.S. Department of Commerce announced Intel had been awarded up to $3 billion in direct funding under a part of the Chips Act known as the Secure Enclave. The program is meant to expand manufacturing of cutting-edge chips for the U.S. government. The Defense Department will execute the award.

“The funding will support the manufacturing of microelectronics and ensure access to a domestic supply chain of advanced semiconductors for national security,” the departments said in a joint statement.

The Secure Enclave funding is separate from the up to $8.5 billion in direct government funding it expects to receive under the Chips Act, which is part of an effort to advance U.S. chipmaking amid the booming artificial intelligence industry and competition with China. The funding was announced in March, and is expected to support the chipmaker’s plans to invest more than $100 billion in the U.S. over the next five years. The company plans to expand its U.S. semiconductor industry footprint with chipmaking sites in Arizona, New Mexico, Ohio, and Oregon.

“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,” Chris George, president and general manager of Intel Federal, said in a statement.

Also on Monday, Intel and Amazon Web Services (AMZN) announced a multi-year, multi-billion-dollar collaboration to advance U.S.-based chipmaking in Ohio. The chipmaker will produce an AI fabric chip for AWS on its most advanced process node, Intel 18A, and a custom Xeon 6 chip on Intel 3. The chipmaker is also considering plans to separate its foundry business from the company, and turn it into a subsidiary with its own board, CNBC reported.

Meanwhile, Intel is reportedly looking for options to fix its faltering business. In August, the chipmaker missed profit expectationspartly due to its decision to “more quickly ramp” its Core Ultra artificial intelligence CPUs, or core processing units, that can handle AI applications, Intel chief executive Pat Gelsinger said on the company’s earnings call. Gelsinger also announced the company’s plans to cut spending, including by laying off more than 15% of employees.