US government reportedly could take 10% stake in Intel – News

The U.S. government may take a 10% stake in Intel Corp., multiple publications reported today.

Word of the potential investment first emerged late last week. At the time, it wasn’t clear how big a stake the Trump administration may seek or under what terms. It was reported that Intel might use some of the proceeds from the deal to fund the construction of its Ohio fab complex.

According to the Wall Street Journal and Bloomberg, the U.S. government could receive the 10% stake in exchange for federal grants issued to Intel last year. In September, the chipmaker won a $3 billion grant to make chips for the U.S. defense sector. Two months later, it received $7.86 billion in direct funding under the U.S. CHIPS and Science Act.

It’s believed that about a quarter of the funds have been disbursed to Intel to date. It’s unclear whether that capital would factor into the stake the U.S. government might take. Alongside the federal grants, Intel received a 25% tax credit on more than $100 billion in planned fab investments.

Bloomberg reported that the sale of a stake to the U.S. government might not give Intel access to additional funds. Instead, it might only enable the chipmaker to more quickly access the $10.7 billion in grants it won last year.

A near-term cash infusion might make it easier for the company to pursue its turnaround plan. Intel, which lost $400 million last quarter on flat revenue growth, hopes to cut its operating expenses by $1.5 billion over the next 16 months. To that end, the company recently cut 15% of its workforce and scaled back some fab investments.

Intel is also refining its chip design roadmap as part of its push to become more competitive. 

Chief Executive Officer Lip-Bu Tan, who took the helm in March to lead the turnaround initiative, told employees that the company will reintroduce SMT to its central processing units. SMT, or simultaneous multithreading, allows a CPU to perform computations for multiple threads side-by-side. A chip that doesn’t feature the technology can only run calculations for one thread at any given time, which is less efficient.

U.S. President Donald Trump called for Tan to resign earlier this month. He met with Tan at the White House a few days later and appeared to change his stance, calling the executive’s career “an amazing story.” The Trump administration’s plan to take a stake in Intel is believed to have emerged as a result of that meeting.

According to today’s Bloomberg report, the White House could also seek stakes in other chipmakers that have won CHIPS Act funding. However, discussions about the topic are believed to be in an early stage. The paper’s sources noted that the terms of the investment in Intel could also change.

Photo: Intel