$Intel (INTC.US)$ shares surged some 8% after hours Monday following reports that the company is set to qualify for up to $3 billion in federal funding to produce semiconductors for U.S. military applications, coupled with news of a spin-off of its struggling foundry business and a new Amazon deal.

INTC gained 7.7% to $22.52 shortly before 4:45 p.m. ET on multiple catalysts.

First, Intel announced plans after the bell to spin out its troubled foundry business into a separate entity with its own board and the ability to raise outside capital.

CEO Pat Gelsinger disclosed the move in an open letter to employees in which he also announced expanded strategic cooperation with $Amazon (AMZN.US)$and its Amazon Web services cloud business.

Under the deal, the companies will co-invest in custom chip designs, while Amazon agreed to what Gelsinger called  “multi-year, multi-billion-dollar framework covering product and wafers from Intel.”

Meanwhile, the potential military grant -- part of the CHIPS and Science Act's Secure Enclave program -- aims to secure a domestic supply of advanced chips critical for defense and intelligence purposes.

Intel has been working closely with the U.S. government through various defense programs such as the State-of-the-Art Heterogeneous Integration Prototype and Rapid Assured Microelectronics Prototypes-Commercial (RAMP-C). This latest funding would help expand Intel's capabilities in producing cutting-edge semiconductors across its facilities in Arizona, Ohio and other states.

While the company has not officially received the funding, Intel is seen as a frontrunner among chipmakers competing for the grants.

This comes on top of an already proposed $8.5 billion in grants and $11 billion in loans Intel is negotiating under the broader CHIPS Act, which seeks to revitalize the U.S. semiconductor industry.