Intel cautioned that its US stake could affect international sales and limit access to future government grants.
Intel cautioned that its US stake could affect international sales and limit access to future government grants.
Intel said on Monday that the US government’s 9.9% stake in the company could pose significant business risks, potentially affecting international sales and limiting its ability to secure future government grants. The announcement came in a securities filing following the government’s decision to convert $11 billion in grants into an equity stake, marking one of the most notable corporate interventions by President Donald Trump.
Intel CEO Lip-Bu Tan, in a video released by the Commerce Department, said the company did not require the government funding. “I don’t need the grant,” Tan stated. “But I really look forward to having the US government be my shareholder.”
Despite Tan’s remarks, the filing highlighted uncertainties related to the investment. Intel cautioned that the deal could trigger other government entities to seek equity conversions of existing grants or reduce support for future grants.
The shares for the US government will be acquired using $5.7 billion in unpaid grants from the 2022 CHIPS and Science semiconductor subsidy law, along with $3.2 billion awarded to Intel for the Secure Enclave program under Democratic President Joe Biden. The filing noted that Intel’s obligations under the CHIPS Act would be considered discharged to the maximum extent allowed under law, except for the Secure Enclave program.
Intel’s non-US operations may also be affected by the government’s stake, as foreign subsidy laws and regulations could apply. Last year, 76% of Intel’s revenue came from outside the US, with China contributing 29% of total revenue.
The government’s purchase price for Intel shares is $4 below the previous Friday’s closing price of $24.80, making the deal potentially dilutive to existing stockholders. Shares rose 2% in early trading on Monday to $25.25.
The filing also warned that the government’s increased influence over laws and regulations affecting Intel could limit the company’s ability to pursue transactions that benefit shareholders.
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