The Trump administration appears intent on controlling Intel’s ability to make key business decisions regarding its floundering foundry business unit. According to reporting, at a Deutsche Bank conference on Thursday, Intel’s CFO David Zinsner shared new details about the company’s recent deal with the Trump administration, which gave the U.S. government a ten percent equity stake.
The deal was structured to penalize Intel if it spins out its foundry business unit, which makes custom chips for outside customers, within the next few years. Last week’s agreement included a five-year warrant that would allow the U.S. government to take an additional five percent of Intel, at twenty dollars a share, if the company held less than fifty-one percent equity in its foundry business. Zinsner said he expects that warrant to expire.
Zinsner stated that from the government’s perspective, they were aligned and did not want to see Intel take the business and spin it off or sell it to somebody. He added that the company received five point seven billion dollars in cash on Wednesday as a result of the deal. That cash comes from the remaining grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act.
White House press secretary Karoline Leavitt told reporters that the deal was still being ironed out. Intel declined to comment on the deal beyond Zinsner’s remarks.
This deal structure is a clear testament to the Trump administration’s desire to bring more chip manufacturing to the United States, as many players in the industry turn to Taiwan Semiconductor Manufacturing Company’s offshore manufacturing instead. However, this warrant also forces Intel to keep a business unit that is losing money. Intel Foundry reported an operating income loss of three point one billion dollars during the second quarter and has been a source of strife for the semiconductor business.
There have been calls from analysts, board members, and investors alike to spin out the struggling foundry unit. It looked like that might actually happen last fall, before Intel Foundry’s architect, former CEO Pat Gelsinger, retired suddenly in December.