Doesn't this create an incentive for the US Gov't to boost Intel and harm their competitors? That seems not great to me from a competition & healthy markets standpoint.

The problem is more severe. Previously the US government was passing laws (such as the CHIPS act) and then enforcing/executing them.

Now it is just doing whatever it wants.

This is only good for a very small sub-set of people, everyone else is worse off.

What competitors?