Intel has announced that it obtained $5.7 billion from the Chips Act, which comes with a stipulation giving the U.S. government a 10% stake in the struggling semiconductor manufacturer.
David Zinsner, Intel’s finance chief, mentioned that the company received these funds on Wednesday. During an investment meeting the following day, he suggested Intel might explore additional external investments.
“We see potential for outside investors in the foundry,” Zinsner noted. “This could serve as a second opportunity to raise funds necessary for the foundry’s expansion,” he added, hinting at future growth possibilities.
In the previous month, Intel’s second-quarter revenue exceeded Wall Street expectations. However, the stock took a hit, dropping 8%, primarily due to concerns regarding the Foundry units, which produce chips for other companies.
The company is also under pressure from the White House, which is advocating for a sizable share of Intel. This has created a somewhat tense atmosphere surrounding the negotiations.
A spokesperson for the White House, Caroline Leavitt, stated on Thursday that discussions were ongoing, with the Commerce Department ironing out the details.
“The Ts are being crossed and the Is dotted,” Leavitt remarked, indicating that the process is still underway.
In a recent business filing, Intel cautioned that partnerships with the U.S. government could lead to unintended consequences, possibly affecting investors, employees, and various stakeholders.
“There might also be situations concerning transactions related to the company that could heighten public or political scrutiny,” the statement read.
Shortly after meeting with Intel CEO Lip-Bu Tan, President Trump indicated his support for the deal but requested that Tan distance himself temporarily. This followed a letter from Senator Tom Cotton, who raised concerns about Tan’s alleged ties to the Chinese military and Communist Party.
After his meeting with Tan, Trump, along with key cabinet members, adjusted their approach regarding support for Intel.
Born in Malaysia and raised in Singapore, Tan took the lead at Intel after the company let go of Pat Gelsinger amidst disappointing earnings and layoffs.
Previously, Intel was granted $8.5 billion under the Chips Act as part of a national security initiative aimed at developing microchips essential for defense and intelligence purposes. This amount was later reduced to around $7.855 billion, but Intel remains one of the largest recipients of federal funding.
