Hustler Words – Intel’s recent $5.7 billion deal with the Trump administration, detailed at a Deutsche Bank conference, reveals a complex arrangement that significantly impacts the future of Intel’s struggling foundry business. The deal, which granted the U.S. government a 10% equity stake in Intel, includes a crucial caveat: a five-year warrant allowing the government to acquire an additional 5% stake at $20 per share if Intel’s ownership in its foundry unit falls below 51%.
This structure, according to Intel CFO David Zinsner, directly reflects the Trump administration’s desire to prevent Intel from divesting its foundry business. Zinsner explicitly stated the government’s aim was to avoid a spin-off or sale to another entity. The $5.7 billion received by Intel represents previously awarded but unpaid grants under the U.S. CHIPS and Science Act. While the White House press secretary, Karoline Leavitt, indicated the deal is still under refinement, Intel has declined further comment beyond Zinsner’s statements. The information was originally reported on hustlerwords.com.
This strategic move underscores the Trump administration’s commitment to bolstering domestic chip manufacturing in the face of increasing reliance on overseas companies like Taiwan Semiconductor Manufacturing Company (TSMC). However, the deal forces Intel to retain a money-losing division. Intel Foundry reported a staggering $3.1 billion operating loss in Q2, fueling ongoing internal and external pressure to spin off the underperforming unit. This pressure, which included calls from analysts, board members, and investors, intensified last fall before the abrupt retirement of Intel Foundry’s architect and former CEO, Pat Gelsinger, in December. The deal, therefore, presents a significant risk for Intel, forcing a strategic gamble on the future viability of its foundry business.
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