On Monday (August 25), U.S. chipmaker Intel warned that the Trump administration’s 10% stake in the company could pose risks to its business. If the chip manufacturing operations fail to meet certain thresholds, the government’s ownership could even rise to 15%.
In a filing with the U.S. Securities and Exchange Commission (SEC), Intel noted that the agreement announced by President Trump last Friday makes the federal government the company’s largest shareholder, which could impact its international sales. The international market accounts for 76% of its revenue.
Intel also stated that the agreement could lead to lawsuits and face opposition from foreign governments, business partners, and even its own employees.
On August 22, the U.S. government reached an agreement with Intel to acquire approximately 9.9% of its shares for about $8.9 billion, making it one of Intel’s largest shareholders. This investment is partially funded by subsidies from the U.S. CHIPS Act.
According to Intel, if the company’s ownership in its "foundry business" (i.e., chip production facilities) falls below 51%, the government has the right to purchase an additional 5% of shares at $20 per share over the next five years, increasing its stake from 10% to 15%.
Intel is one of the few companies that both designs and manufactures chips. However, its chip foundry business has been consistently losing money in recent years, dragging down the company’s performance. Previously, Intel had explored solutions for its struggling foundry business, including spin-offs and sales.
It is worth noting that in such disclosures, risk lists are often formal enumerations, and not all risks will materialize. However, Intel pointed out that government ownership is uncharted territory, and the company may face unusual risks.
Intel stated: "Given the extreme rarity of precedents where the U.S. government has become a significant shareholder in a similar company in recent years, it is difficult to foresee all potential consequences."
Reportedly, Intel will issue shares directly to the U.S. Department of Commerce at a discounted price of $20.74 per share, which will dilute existing shareholder value. The transaction is set to close on Tuesday or "as soon as practicable thereafter."
Notably, earlier this month, Japan’s SoftBank Group announced a $2 billion investment in Intel at a price of $23 per share.
As of Monday’s close, Intel’s stock price was $24.55 per share. Since the beginning of last year, Intel’s stock price has fallen by about half, and its current market capitalization is approximately $107.5 billion.
