[News] U.S. to Acquire 10% Intel Stake, Yet Foundry Future Rests on Customer Demand

According to Reuters, President Donald Trump announced on Friday that the U.S. will acquire a 10% stake in Intel through a deal that converts government grants into equity. Under the terms of the agreement, the U.S. government will invest $8.9 billion in Intel common stock, as indicated by a press release from the company.

However, as the report highlights, analysts caution that the funding alone will not be enough for Intel’s foundry business to thrive. An analyst cited in the report emphasized that Intel’s recovery hinges on securing external customers for its advanced 14A manufacturing process. Without sufficient demand, the analyst added, government support on its own is unlikely to revive Intel’s foundry operations.

Reuters further underscores that the stake would make the U.S. government Intel’s largest shareholder, though neither Trump nor the company disclosed when the deal would be finalized. An analyst cited by the report also pointed to governance risks, raising questions about how such a structure might affect Intel’s ability to act in the best interests of its shareholders.

The report also notes that while Washington will not take a seat on Intel’s board and has agreed to align its votes with the board on matters requiring shareholder approval, the arrangement allows for “limited exceptions.” At the same time, it highlights that the government is purchasing its stake at a 17.5% discount to Intel’s closing share price on Friday.

In addition, the report states that the government will receive a five-year warrant priced at $20 per share, giving it the option to acquire an additional 5% of Intel stock if the company’s ownership of its foundry business falls below 51%.

How U.S. Stake in Intel Could Impact TSMC

Notably, regarding TSMC’s position after the U.S. government’s decision to take a stake in Intel, institutional investors cited by Economic Daily News said the likelihood of TSMC being required to work with Intel in foundry services has decreased, while the risk of technology leakage has also lessened—making the development broadly positive for TSMC.

However, Economic Daily News also cautioned that now that Washington has become a shareholder, it will be important to monitor whether the U.S. government requires other tech companies to place orders with U.S. fabs—a move that could weigh on TSMC.

Read more

• [News] Trump Reportedly Spares TSMC, Micron from Equity Grabs after Chipmakers Ramp U.S. Investment
• [News] Trump Administration Reportedly Mulling a Stake in Intel Amid U.S. Manufacturing Push

(Photo credit: Lip-Bu Tan’s X)