Intel has revealed that its $7.86 billion subsidy deal from the U.S. government imposes limits on the company’s ability to sell stakes in its chip manufacturing subsidiary, should the unit eventually become an independent entity. Announced by the U.S. Commerce Department as part of a broader $39 billion initiative to boost domestic semiconductor production, the subsidy underscores the government’s commitment to revitalizing chip manufacturing within the United States.
The restrictions surfaced in a securities filing on Wednesday, where Intel detailed that the agreement mandates the company to retain at least a 50.1% ownership stake in its chipmaking arm, Intel Foundry, if the unit transitions into a private legal entity. Furthermore, if Intel Foundry goes public, the company cannot sell more than 35% of its stake to any single shareholder without encountering change-in-control provisions.
Intel CEO Pat Gelsinger had previously announced in September that the company was exploring plans to spin off Intel Foundry as a subsidiary and was open to external investments. However, the latest filing indicates that any such structural shifts would require strict adherence to the Commerce Department’s conditions.
The subsidy is part of the CHIPS Act’s broader framework aimed at strengthening America’s semiconductor industry. It also benefits companies like Taiwan Semiconductor Manufacturing Co. (TSMC), among others. A Commerce Department spokesperson stated that similar change-in-control terms are being negotiated with all recipients of direct grants.
Intel emphasized that compliance with these restrictions is crucial to advance its $90 billion worth of projects in states such as Arizona, New Mexico, Ohio, and Oregon. These projects are central to Intel’s mission to maintain the production of cutting-edge chips within the U.S. Any deviation from the terms, such as changes in ownership, could necessitate obtaining approval from the Department of Commerce.
Intel has not commented on the recent disclosure. The announcement reflects both the scale of government support for semiconductor manufacturing and the stringent conditions tied to securing such investments.
Featured image courtesy of Money & Markets
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