(Reuters) - Intel ( INTC ) expects a small reduction from the $8.5 billion preliminary U.S. subsidies planned for the chipmaker, according to a person familiar with the matter.

The $8.5 billion in direct grants were part of a larger package of loan guarantees, tax incentives and other measures announced in March.

But in September, Intel ( INTC ) also won a $3 billion contract with the U.S. Department of Defense. The funding for that contract ended up coming from the $39 billion that U.S. lawmakers allocated for chip subsidies rather than the Pentagon's budget, which led to a reduction in Intel's ( INTC ) direct grant award, the person said.