by Brian Shilhavy, Health Impact News:
The U.S. Government just won’t let the Big Tech bubble burst, as it bailed out the EV Truck company Rivian today for $6.6 billion, and it bailed out computer chip manufacturer Intel for $7.9 billion also today.
Rivian Stock Slips. How $6.6 Billion From Biden Can Reignite the EV Maker.
Rivian Automotive stock was giving up some of its recent gains on Tuesday after the electric-vehicle maker said it had received a multi-billion-dollar loan from the U.S. government to help it make more cars.
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Shares were down 1.2% to $11.46.
The losses showed investors weren’t wowed by Rivian’s latest plan to boost its earnings. The EV maker said late Monday that it had received a conditional $6.6 billion loan from the government, adding that it plans to use the funds to support building a production plant in Stanton Springs North, Ga.
The start-up probably needs to get going on building the Georgia plant if it wants to spark a turnaround, given that right now it isn’t building enough EVs to make a profit.
It’s expected to produce fewer than 50,000 cars this year, but it said that number will rise by 400,000 once it’s finished building the new facility. The first phase of constructing the plant is expected to begin in 2028. (Source.)
If I, as an independent business owner with no other investors or debts, cannot run a profitable business because not enough customers buy my products, I go out of business.
But not if you are in Big Tech. The government will just keep giving you money even though very few customers want to buy your over-priced and over-hyped products.
The Big Tech crash should have happened at the end of 2022 or the beginning of 2023, after the FTX scandal and blow up. And it almost did crash in early 2023 when the top Silicon Valley banks failed.
The U.S. Government bailed them out then also, as Billionaire depositors who had more money on deposit than was insured by the FDIC ($250,000), got bailed out then too.
And if you are in Big Tech and also a defense contractor, you get even more government handouts without having to make a profit.
Intel Receives $7.9 Billion in Chips Act Funding, but Says It Won’t Take Federal Loans
The government has finalized its grant to Intel.
On Tuesday, the Biden administration announced the Commerce Department has awarded $7.865 billion to the company via direct funding from the Chips and Science Act.
“These facilities are going to fundamentally change chip manufacturing and the strength of the chips industry in the U.S.,” Gina Raimondo, Secretary of Commerce, said on a call with reporters. “It’s a huge step forward in strengthening the U.S. semiconductor supply chain.”
Along with the funding, Intel agreed not to conduct stock buybacks for five years, with some undisclosed exceptions. The company had already paused its buybacks in recent years.
According to a senior administration official, the reason Intel didn’t receive the full $8.5 billion was due to a subsequent $3 billion “Secure Enclave” contract given to Intel to make chips for the U.S. military.
The official said the government takes a “portfolio level” approach to funding, and Intel received the largest aggregate award of nearly $11 billion. The person said the lower award had nothing to do with Intel’s recent financial troubles.
The official also said Intel wouldn’t be taking federal loans that were offered. In March, Intel CEO Pat Gelsinger had called terms around up to $11 billion in federal loans “very favorable,” but the company’s sentiment has shifted.
“As Intel reviewed the loan agreement, it became clear that the terms attached were less favorable than anticipated for Intel’s shareholders and did not align with Intel’s long-term growth and market interests,” the Intel spokesperson said Tuesday. (Source.)
Yeah, if I had a choice between government money I did not have to pay back and a government loan that I did have to pay back, I would skip the loan too.
But I don’t have those opportunities, because my long-term investments lie elsewhere.
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