Intel Warns U.S. Government Stake Could Hit Overseas Sales

TMTPOST -- Intel Corporation on Monday warned the Trump administration’s nearly 10% stake could hit its overseas sales of the beleaguered U.S. chipmaker.

Credit：Intel

Intel said in a regulatory filling listed a number of risks from the deal with the U.S. Department of Commerce reached last Friday. One of the risks is that its business outside the U.S. may be adversely impacted by the U.S. governemnt being a significant shareholder.

“Sales outside the U.S. accounted for 76% of the Company’s revenue for the fiscal year ended December 28, 2024,” said Intel. “Having the U.S. Government as a significant stockholder of the Company could subject the Company to additional regulations, obligations or restrictions, such as foreign subsidy laws or otherwise, in other countries.”

Since the U.S. government may become its largest stockholder following the deal, Intel believed that the government stake may limit potential future transactions that may be beneficial to stockholders. It also suggested political risks related to the deal as the transactions are subject to to risks from changes in laws, regulations, or their interpretations, as well as shifts in federal administration and congressional priorities.

Intel noted it’s hard to predict all the potential consequences given the scarcity of recent US precedents for transactions like the aforementioned deal. “Among others, there could be adverse reactions, immediately or over time, from investors, employees, customers, suppliers, other business or commercial partners, foreign governments or competitors. There may also be litigation related to the transaction or otherwise and increased public or political scrutiny with respect to the Company,” said the company.

U.S. President Donald Trump on Friday announced his administration now “fully owns and controls 10% of INTEL, a Great American Company that has an even more incredible future.” He in a social media post touted “a great deal for America” since the U.S. government “paid nothing for these shares” now valued at around $11 billion. He also highlighted significance of the deal as Intel is building cutting-edge semiconductors, which is “fundamental to the future of our Nation.”

Intel later Friday unveiled some details of the agreement. The company suggested it agreed to give a nearly 10% stake to the Trump administration in exchange for a total of $11.1 billion funding under the CHIPS and Science Act of 2022 (CHIPS Act) .

Under the agreement, the U.S. government will make an $8.9 billion investment in Intel common stock on top of the $2.2 billion in CHIPS Act grants Intel has received to date. “The government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program,” said Intel in a statement.

With the $8.9 committed investment, the U.S. government agreed to purchase 433.3 million primary shares of Intel common stock at a price of $20.47 per share, equivalent to a 9.9% stake in the company. The federal government thus became one of Intel’s biggest shareholders, and took the stakes at an over 17% discount from Intel’s closing on Friday. Shares of the company rose 5.5% that day following Trump’s announcement.

Despite the investment, the U.S. government will have no board seat or other governance or information rights, and it agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions. The government will receive a five-year warrant, at $20 per share for an additional five% of Intel common shares, exercizable only if Intel ceases to own at least 51% of the foundry business.