Pentagon Scraps Plan to Spend $2.5 Billion on Intel Grant (1)

The Pentagon pulled out of a plan to spend as much as $2.5 billion on a chip grant to Intel Corp., people familiar with the situation said, putting the onus on another federal agency — the Commerce Department — to make up for the shortfall.

The move threatens to limit the total amount that Intel has been expecting to get in federal funding, setting up a contentious situation, said the people, who asked not to be identified because the deliberations are private. Beyond the defense money, Intel has been seeking incentives worth more than $10 billion from the Chips ...