The US government has officially taken a stake in Intel, making an effective $8,9-billion investment in the company’s common stock.
The government’s equity stake will be funded by the remaining $5,7-billion in grants previously awarded, but not yet paid, to Intel under the US CHIPS and Science Act and $3,2-billion awarded to the company as part of the Secure Enclave program.
“Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the US Department of Defense,” according to a statement issued by the chip-maker.
The $8,9-billion investment is in addition to the $2,2-billion in CHIPS grants Intel has received to date, making for a total investment of $11,1-billion.
“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the US, Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” says Lip-Bu Tan, CEO of Intel. “President Trump’s focus on US chip manufacturing is driving historic investments in a vital industry that is integral to the country’s economic and national security. We are grateful for the confidence the president and the administration have placed in Intel, and we look forward to working to advance US technology and manufacturing leadership.”
Howard Lutnick, US Secretary of Commerce, comments: “Intel is excited to welcome the United States of America as a shareholder, helping to create the most advanced chips in the world. As more companies look to invest in America, this administration remains committed to reinforcing our country’s dominance in artificial intelligence while strengthening our national security.”
Under the terms of today’s announcement, the government agrees to purchase 433,3-million primary shares of Intel common stock at a price of $20.47 per share, equivalent to a 9,9% stake in the company.
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.
The government will receive a five-year warrant, at $20 per share for an additional 5% of Intel common shares, exercisable only if Intel ceases to own at least 51% of the foundry business.
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 US investment plans.
“Intel has continued to strategically invest in research, development and manufacturing in the US since the company’s founding in 1968,” according to the Intel statement. “Over the last five years, Intel has invested $108-billion in capital and $79-billion in R&D, the majority of which were dedicated to expanding US-based manufacturing capacity and process technology.
“Intel is currently undertaking a significant expansion of its domestic chipmaking capacity, investing more than $100-billion to expand its US sites. The company’s newest chip fabrication site in Arizona is expected to begin high-volume production later this year, featuring the most advanced semiconductor manufacturing process technology on US soil.”
The move by the US government to invest in Intel has been well received by other US-based technology companies, including Microsoft, Dell, HP and AWS.
Pictured: Lip-Bu Tan, CEO of Intel