“Intel Discloses Restrictions on Sale of Chipmaking Unit Stake Amid U.S. Subsidy Deal”

Written by Stephen Nellis

Intel has recently disclosed that the $7.86 billion subsidy it received from the U.S. government limits its ability to offload stakes in its chipmaking division, should it become autonomous. The U.S. Commerce Department granted this subsidy to Intel, as part of a $39 billion initiative to rejuvenate the American chip manufacturing industry. Other beneficiaries of this scheme include Taiwan Semiconductor Manufacturing Co and other industry players.

Last September, Intel’s CEO, Pat Gelsinger, announced plans to transform its chip production operations into a subsidiary, known as Intel Foundry, while also considering the inclusion of external investors. However, recent filings indicate that the conditions attached to the subsidy necessitate Intel to retain a minimum 50.1% ownership of Intel Foundry, in case it evolves into a separate privately-owned legal entity.

In the scenario that Intel Foundry turns public and Intel ceases to be the largest stakeholder, the company is allowed to sell only up to 35% of Intel Foundry to a single shareholder, due to change-in-control provisions.

Intel has yet to comment on these revelations. A spokesperson for the Commerce Department has stated that the government is presently negotiating change-in-control stipulations with all direct grant beneficiaries.

To maintain its ongoing $90 billion worth of projects across Arizona, New Mexico, Ohio, and Oregon and to continue the production of advanced chips in the U.S., Intel must adhere to these restrictions. Should there be any changes in control, Intel may have to obtain approval from the U.S. Department of Commerce.