Intel received $5.7bn from the US government as part of a negotiated deal. The federal government acquired a 10 percent stake and secured a five-year warrant for an additional 5 percent if Intel ceases to own more than 51 percent of its manufacturing operations. CFO David Zinsner stated he expects the warrant to expire worthless and downplayed the likelihood of Intel losing majority control of manufacturing. The Trump administration converted CHIPS Act funds into capital to purchase the stake. The White House indicated details remain under negotiation. Questions remain about Intel's foundry and potential outside investment as operations separate.
In a news briefing on Thursday, however, White House press secretary Karoline Leavitt indicated the deal with Intel was still being negotiated. The Intel deal is still being ironed out by the Department of Commerce. The Ts are still being crossed, the I's are still being dotted, Leavitt said. It's very much still under discussion. Many of the enduring questions hinge upon Intel's chip manufacturing arm, or foundry. Trump campaigned for re-election on the promise that he would restore the US's domestic manufacturing industry and outcompete economic rivals like China in the technology sector.
As part of the deal, the government negotiated a five-year warrant for an additional 5 percent of Intel's shares, in case the company should cease to own more than 51 percent of its manufacturing operations. I don't think there's a high likelihood that we would take our stake below 50 percent, Zinsner said. So ultimately, I would expect [the warrant] to expire worthless. The Trump administration converted funds earmarked for Intel under the 2022 CHIPS Act signed into law by former President Joe Biden into capital to buy the US government's stake.
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