Intel today announced an agreement with the U.S. government to support American semiconductor technology and manufacturing leadership. Under the agreement, the United States government will invest $8.9 billion in Intel common stock. The government believes that Intel is key to advancing its national priorities and expanding the domestic semiconductor industry.
It is important to note that this is not a new investment from the government. Instead, the equity stake will be funded by $3.2 billion awarded to Intel as part of the Secure Enclave program and the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act. Intel has already received $2.2 billion in CHIPS grants to date, making the U.S. government"s total investment $11.1 billion.
As part of this arrangement, the U.S. government will get 433.3 million primary shares of Intel common stock at a price of $20.47 per share, equivalent to a 9.9 percent stake in the company.
Pat Gelsinger, CEO of Intel, said:
“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. The administration"s focus on U.S. 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 U.S. technology and manufacturing leadership.”
Despite its nearly 10% stake in Intel, the U.S. government will have no board representation or other governance or information rights. The government will also vote with the Company’s Board of Directors on matters requiring shareholder approval, with some exceptions.
The U.S. government is also receiving a five-year warrant at $20 per share for an additional five percent of Intel common shares. This warrant will be applicable only if Intel"s foundry business ownership falls below 51%. Since the U.S. government is taking equity ownership, 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.
Satya Nadella, Chairman and Chief Executive Officer, Microsoft, said:
“The decades-long partnership between Microsoft and Intel has pioneered new frontiers of technology and showcased the very best of American ingenuity and innovation. Intel’s continued investment in strengthening the U.S. semiconductor supply chain, supported by the bold strategy to rebuild this critical industry on American soil, will benefit the country and broader technology ecosystem for years to come.”
Earlier this month, SoftBank announced a definitive securities purchase agreement with Intel under which it will invest $2 billion in Intel common stock at $23 per share. The investment indicates that SoftBank may eventually look to manufacture its Arm-based chipsets and other AI accelerator chips at Intel Foundries on U.S. soil.