The United States government is set to acquire a 9.9% equity stake in Intel, a deal valued at $8.9 billion, or $20.47 per share. This price represents a discount of approximately $4 from Intel's closing share price of $24.80 on Friday. The funding for this purchase comes from $5.7 billion in previously allocated grants from the Biden-era CHIPS Act and an additional $3.2 billion awarded to Intel for the Secure Enclave program.
President Donald Trump announced this extraordinary intervention, stating the deal converts government grants into an equity share in the struggling chipmaker. The agreement also includes a five-year warrant at $20 per share, allowing the U.S. to acquire an additional 5% of Intel stock if the company loses control of its foundry business. This move transforms the U.S. government into one of Intel's largest shareholders.
Technology lobbyist Adam Kovacevich, CEO of Chamber of Progress, described the deal as a "lifeline" for Intel, suggesting the company could have faced leadership changes without it. The deal effectively gives Intel a "too-strategic-to-fail" status, potentially opening doors for future partnerships. While Intel announced it received $5.7 billion in cash, the White House later clarified that the deal was still being finalized by the Department of Commerce, with details "still being ironed out."
Earlier discussions around the deal suggested that the Intel shares acquired by the government would be non-voting, ensuring the government could not directly influence company management. This equity stake is intended to incentivize Intel to maintain control of its contract manufacturing business, known as the foundry operation. SoftBank also recently agreed to invest $2 billion in Intel.
