The Trump administration has provided Intel (INTC) with $5.7 billion in cash, said CFO David Zinsner at an investor conference on Thursday. In addition, the government will receive a 5% ownership warrant in the event that Intel’s stake in its foundry business dips below 51%. INTC recovered from its intraday low following the announcement and is now trading in positive territory.
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Intel is in the process of separating its foundry division from its chip design business and has said that the division is open to outside investment. “I don’t think there’s a high likelihood that we would take our stake below 50%,” said Zinsner. “So ultimately, I would expect (the warrant) to expire worthless.”
Government Investment Supports Intel’s Foundry Comeback
Last week, the Trump administration agreed to take a 10% stake in Intel using grant capital provided to the company from the Chips Act. The agreement comes after CEO Lip-Bu Tan met with Trump at the White House.
In July, Intel warned that it could be forced to completely exit the foundry business unless it secures a significant order for its 14A semiconductor manufacturing technology. Zinsner added that the government’s investment acts as an incentive for Intel to improve its foundry unit.
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