A few days ago, news broke that following a meeting with Intel CEO Lip-Bu Tan, the Trump administration was looking to take an unspecified stake in Intel. Now, Bloomberg says the number being discussed is around $10.5 billion. Here are the details.
Not what the market seemed to be expecting
Intel stock slid today, following Bloomberg‘s report that the Trump administration was considering converting Intel’s $10.9 billion CHIPS Act funding into an equity stake, potentially giving the U.S. government a roughly 10% share in the company.
Interestingly, investors had initially welcomed the idea of a federal investment last week, sending Intel stock to its best weekly rally since February. But shares slipped today after Bloomberg reported details of the potential CHIPS-to-equity plan, indicating a less-than-ideal arrangement in the eyes of the market.
For context, Intel was awarded $10.9 billion in CHIPS and Science Act grants in 2022, for both commercial and defense-related semiconductor manufacturing.
Bloomberg’s sources say the government is considering turning some or all of that grant money into equity. A 10% stake in the company would cost, at current market value, around $10.5 billion, and would make the government Intel’s largest shareholder.
The report also says that the plan hasn’t been finalized, and the exact size of the stake could still change.
CHIPS-to-equity could accelerate funding, without increasing it
That’s because under current rules, CHIPS Act grants are released gradually as companies hit agreed-upon milestones. So this approach would likely just mean a faster timeline for Intel, rather than more actual money.
As of January, Intel had received $2.2 billion, but it’s unclear whether that initial tranche would count toward any equity conversion, or whether additional funds have been disbursed since President Trump took office.
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