The U.S. government is planning to reduce Intel Corp's preliminary federal chips grant from $8.5 billion to below $8 billion, according to a report by the New York Times.

This adjustment takes into account a $3 billion contract Intel received to manufacture chips for the Pentagon. Earlier this year, the Biden administration announced nearly $20 billion in grants and loans to Intel, with the aim of enhancing domestic semiconductor chip production. This funding represents the largest government investment in leading-edge chip manufacturing to date.

The preliminary agreement includes $8.5 billion in grants and up to $11 billion in loans for Intel's operations in Arizona, which will support the construction of two new factories and the modernization of an existing facility. This initiative is part of the broader 2022 CHIPS and Science Act, which allocates $52.7 billion to boost domestic semiconductor output, including $39 billion for production subsidies and $11 billion for research and development.