Intel and the US Commerce Department are finalizing an $8 billion grant as part of the CHIPS Act, a source told CNBC on Monday.

The funding aims to bolster Intel's manufacturing capacity and support its struggling foundry business. Earlier this year, the company secured a $3 billion Pentagon contract to produce advanced chips.

The news comes after a New York Times report revealed that the grant amount may be reduced by $500 million due to concerns over Intel's performance and shifting priorities. Moreover, in recent months, the chipmaker has been looking to raise cash by selling off assets and has faced a potential takeover bid from Qualcomm.