{"id":49020,"date":"2025-08-25T08:43:14","date_gmt":"2025-08-25T12:43:14","guid":{"rendered":"https:\/\/mjtsai.com\/blog\/?p=49020"},"modified":"2025-09-02T14:13:04","modified_gmt":"2025-09-02T18:13:04","slug":"us-government-takes-10-stake-in-intel","status":"publish","type":"post","link":"https:\/\/mjtsai.com\/blog\/2025\/08\/25\/us-government-takes-10-stake-in-intel\/","title":{"rendered":"US Government Takes 10% Stake in Intel"},"content":{"rendered":"

Kif Leswing<\/a> (via Hacker<\/a> News<\/a>):<\/p>\n

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Intel, the only American company capable of making advanced chips on U.S. soil, said in a press release that the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company. Intel noted that the price the government paid was a discount to the current market price.<\/p>\n

Of the total, $5.7 billion of the government funds will come from grants under the CHIPS Act that had been awarded but not paid, and $3.2 billion will come from separate government awards under a program to make secure chips.<\/p>\n

[…]<\/p>\n

The government will also have a warrant to buy an additional 5% of Intel shares if the company is no longer majority owner of its foundry business.<\/p>\n

[…]<\/p>\n

Earlier this week, Intel announced another major backer, when SoftBank said it would make a $2 billion investment in the chipmaker, equal to about 2% of the company.<\/p>\n<\/blockquote>\n\n

Intel<\/a>:<\/p>\n

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Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the U.S. Department of Defense.<\/p>\n

[…]<\/p>\n

“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” said Lip-Bu Tan, CEO of Intel.<\/p>\n

[…]<\/p>\n

The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.<\/p>\n

[…]<\/p>\n

The existing claw-back and profit-sharing provisions associated with the government’s previously dispersed $2.2 billion grant to Intel under the CHIPS Act will be eliminated to create permanency of capital as the company advances its U.S. investment plans.<\/p>\n<\/blockquote>\n\n

On the one hand, this seems to come out of the blue, but it’s kind of just making Intel’s implicit quasi-government status more explicit. In addition to being a direct military supplier, Intel is at least as strategic as GM was during the GFC, and no American government is going to allow it to fail. It’s not clear to me how much strong-arming the deal required. With the funds already committed, you could look at this as the government just taking shares that were not part of the original CHIPS deal. What Intel is getting in return is the removal of some restrictive conditions, in exchange for essentially non-voting shares. Is that worth more than the dilution to shareholders? Did Congress authorize this? What happens from here? Maybe the government becomes a long-term partner, and maybe it’s not such a silent partner in reality. Maybe, with the provisions removed, Intel starts buying back shares, the stock price goes up, investors are happy, and the government sells its stake that “cost nothing” and claims victory.<\/p>\n\n

Previously:<\/p>\n