Intel received $5.7 billion in cash from the U.S. government in exchange for a 10% equity stake negotiated by President Donald Trump. The U.S. stake serves as an incentive for Intel to retain control of its foundry, the company’s contract chip manufacturing business. The deal includes an additional 5% warrant exercisable if Intel’s ownership of the foundry falls below 51%, though Intel’s CFO said the company is unlikely to reduce its stake below 50% and expects the warrant to expire worthless. Intel has begun separating the foundry from its design business and created a separate management board for it. Intel shares traded at $24.64, down 0.8%.
Intel received the $5.7 billion in cash on Wednesday night as part of the deal U.S. President Donald Trump negotiated for a 10% stake in the struggling chipmaker, finance chief David Zinsner said at an investor conference on Thursday. The stake in Intel announced by the U.S. government last week is an incentive for Intel to retain control of its contract manufacturing business, or foundry, Zinsner said.
As part of the deal, the government negotiated an additional 5% warrant, should Intel cease to own more than 51% of its foundry operation. "I don't think there's a high likelihood that we would take our stake below 50%," Zinsner said. "So ultimately, I would expect (the warrant) to expire worthless." Intel has taken steps to separate its contract chip manufacturing arm, or foundry, from its design business. The company has previously said it could take outside investment in the foundry unit, and it has created a separate management board to govern it.
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