Intel warns US govt stake could impact international sales
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The news: US tech giant Intel warned that a 10% stake by the US government in the chipmaker could risk its businesses by potential harm to international sales and threatening its ability to secure future grants from the government.
The context: A filing submitted by Intel on Monday to the Securities and Exchange Commission (SEC) explains a series of “risk factors” posed by the US government’s plans to convert government grants into an equity stake in Intel, which was announced earlier this month.
The US government’s equity stake will be funded by USD5.7 billion ($8.77 billion) in unpaid grants to Intel under the former President Joe Biden’s CHIPS and Science Act and USD3.2 billion will be awarded to the company as part of the Secure Enclave program (also provided under Biden).
The filing says that sales outside the US accounted for 76% of Intel’s revenue for the fiscal year ended December 2024 and that: “Having the US Government as a significant stockholder of the Company could subject the Company to additional regulations, obligations or restrictions, such as foreign subsidy laws or otherwise, in other countries,” the filing reads.
On future grants, the filing says that converting future grant funding into investments in common stock by the US Government, Intel will no longer benefit from the reduced future operating costs made possible by such grant funding. Additionally, it remains uncertain as to whether the transactions may cause other government entities to seek to convert their existing grant arrangements with Intel into equity investments or be unwilling to support Intel with future grants, potentially limiting Intel’s access to capital.
On Monday, Trump doubled down on the deal, writing on social media: “I will make deals like that [Intel] for our Country all day long.” Earlier on Monday, White House economic adviser Kevin Hassett said the Intel deal is part of a broader White House strategy to create a sovereign wealth fund that could include more companies.
The US government – Intel transaction is set to close on 26 August.
The sources: Intel SEC filing, Reuters
