[News] Intel CFO Says Trump Deal Prevents It From Selling Its Loss-Making Foundry

According to Financial Times, Intel’s chief financial officer said the Trump administration’s investment was intended to prevent the company from selling off its foundry. As the report notes, the government stake effectively locks Intel into a business that has been losing money and that it has repeatedly faced pressure to offload.

The U.S. government has agreed to acquire a 10% stake in Intel. Notably, as the Financial Times highlights, the deal includes a five-year warrant allowing the government to purchase an additional 5% at $20 per share if Intel’s ownership of its foundry business falls below 51%.

Intel CFO David Zinsner said the government’s goal was to stop Intel from spinning off or selling its foundry. Regarding the warrant, he noted there is little chance of Intel reducing its stake below 50% and therefore expects it will ultimately expire, as cited by the report.

Intel Foundry lost $13 billion last year as it struggled to compete with rival TSMC and attract outside customers, Financial Times notes.

How Intel Sees Its Foundry Future

Reuters notes that Intel has previously signaled it might seek outside investment in its foundry unit and has already set up a separate management board to oversee it. On this prospect, Zinsner said the company would likely prefer a strategic investor over a purely financial one, though he added such a move is still “years away.”

Zinsner also said Intel is aiming to secure a major customer next year but remains committed to maintaining “financial discipline” as it develops next-generation manufacturing technologies. He noted that investing in 14A solely for Intel’s internal use would be too costly to provide an “appropriate” return for shareholders, according to Reuters.

Meanwhile, the government’s direct stake may incentivize potential customers to place greater confidence in Intel, Zinsner notes, as cited by Financial Times.

Current Status of the Intel–U.S. Deal

Intel received $5.7 billion in cash as part of the deal negotiated by U.S. President Donald Trump for a 10% stake, Reuters reported. However, White House Press Secretary Karoline Leavitt said the agreement was “still being ironed out by the Department and very much under discussion,” stressing that while the president proposed the deal, the Commerce Secretary is still working to implement it, as the report notes.

Read more

• [News] Intel Filing Cautions U.S. Stake Could Weigh on Future Funding, Overseas Business
• [News] U.S. to Acquire 10% Intel Stake, Yet Foundry Future Rests on Customer Demand

(Photo credit: Intel)