The US government converted CHIPS Act subsidy funds into equity, taking a 10 percent stake in Intel for $8.9 billion and gaining a five-year warrant to acquire an additional 5 percent if Intel cuts foundry ownership below 51 percent. The arrangement aims to prevent Intel from selling its unprofitable foundry division. Intel's foundry lost $13 billion last year and has struggled to attract major external customers such as Nvidia, Apple and Qualcomm amid competition from TSMC. Some analysts and former executives had recommended selling the foundry, and Qualcomm showed acquisition interest.
The US government is investing $8.9 billion (€7.6 billion) in Intel through a conversion of federal subsidies into equity capital. CFO David Zinsner confirms that the deal is intended to prevent Intel from selling its loss-making foundry division. During a Deutsche Bank conference last Thursday, Zinsner revealed the strategic motivation behind the recent government investment, writes FT. The Trump administration has acquired a 10 percent stake in Intel by converting subsidy funds from the CHIPS Act into shares.
You can see it as "a little bit of friction to keep us from moving in a direction that I think ultimately the government would prefer we not move to," Zinsner said of the warrant construction. Intel's foundry business is unprofitable and lost $13 billion last year due to its struggle with rival TSMC and the lack of external customers.
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