Trump administration's deal is structured to prevent Intel from selling foundry unit | TechCrunch

"The deal was structured in a way to penalize Intel if it spins out its foundry business unit, which makes custom chips for outside customers, within the next few years. Last week's deal included a five-year warrant that would allow the U.S. government to take an additional 5% of Intel, at $20 a share, if the company held less than 51% equity in its foundry business. Zinsner said he expects that warrant to expire."

"This deal structure is clearly a testament to the Trump administration's desire to bring more chip manufacturing to the United States as many players in the industry turn to Taiwan Semiconductor Manufacturing Company (TSMC)'s offshoring manufacturing instead. But this warrant also forces Intel to keep a business unit that is losing money. Intel Foundry reported an operating income loss of $3.1 billion during the second quarter and has been a source of strife for the semiconductor business."

Intel granted the U.S. government a 10% equity stake and a five‑year warrant to acquire an additional 5% at $20 per share if Intel holds less than 51% equity in its foundry unit. The warrant penalizes any spin‑out and is intended to discourage selling or spinning off the foundry. Intel received $5.7 billion in remaining CHIPS Act grants as cash from the deal. The White House said the terms were still being finalized. Intel Foundry reported a $3.1 billion operating loss in Q2, and the warrant forces Intel to retain the money‑losing unit.

Read at TechCrunch