Lutnick confirms US government stake in Intel
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More news: US Commerce Secretary Howard Lutnick confirmed that the Trump administration plans to take a stake in the chipmaker, framing the move as a bid to convert Chips and Science Act grants into equity.
Bloomberg first reported the news that the US government was considering taking a 10% stake in Intel, as SoftBank also unveiled its US$2 billion ($3.08 billion) investment in the company.
Shares in Intel rose as much as 11% during New York trading on Tuesday, while SoftBank fell 4%.
Speaking to CNBC on Tuesday, Lutnick explained that the plan would not give the US voting or governance rights over Intel, despite the deal making it the company’s largest shareholder.
“It’s not governance, we’re just converting what was a grant under Biden into equity,” Lutnick told CNBC. “Non-voting.”
“Why are we giving a company worth US$100 billion this kind of money? What is in it for the American taxpayer? And the answer Donald Trump has is we should get an equity stake for our money,” Lutnick added.
“So we’ll deliver the money which was already committed under the Biden administration, we’ll get equity in return for it.”
Intel shares climb on US$2b SoftBank injection, possible US government stake
The news: Shares in Intel climbed as much as 7% in US pre-market trading on Tuesday, on news that the tech giant would gain a USD2 billion ($3.08 billion) capital injection from SoftBank Group.
The numbers: SoftBank plans to buy USD2 billion worth of newly issued Intel common stock directly from the company at USD23 per share. The investment would equate to an approximate 2% stake in Intel.
The context: The investment marks a vote of confidence in the troubled US chipmaker which is currently undergoing a turnaround effort to catch up with rivals in the artificial intelligence chip industry.
On SoftBank’s investment, chairman and CEO Masayoshi Son said that semiconductors are at the foundation of every industry, and that its investment in Intel “reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.”
CEO of Intel Lip-Bu Tan added that he has worked closely with Son for decades and that he “appreciate[s] the confidence he has placed in Intel with this investment.”
SoftBank said the transaction is subject to customary closing conditions.
On Monday, Bloomberg reported that the Trump administration is also in discussions to take a 10% stake in Intel. The deal would involve converting some or all of the chipmaker’s USD10.9 billion in Chips Act grants into equity, according to the report. At current market value, the stake would be worth about USD10.5 billion and could make the US government Intel’s largest shareholder.
The new comes less than two weeks after Trump demanded that Tan resign, after a letter from Republican Senator Tom Cotton raised concerns about Tan’s ties to China, including investments in a number of the country’s semiconductor companies and a recent criminal case involving his former firm, Cadence Design.
The sources: SoftBank press release, Bloomberg, FT
