Why did the government spend almost $9 billion to buy share in Intel? Evidently it isn’t exercise any control over the company.
“The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions,” the statement read.
Where will the dividends from those shares go?
Were these shares in the company’s treasury or were they newly created shares diluting other investors ownership of the company?
he government did not buy the shares on the open market or from the company’s treasury. Instead, Intel agreed to sell 433.3 million new common shares directly to the U.S. government.
The creation of these new shares dilutes the ownership of all other existing investors. The U.S. government now holds a 9.9% stake, making it one of the company’s largest shareholders.
The $8.9 billion investment by the government was not new federal spending. It was funded by converting previously promised, but not yet paid, grants to Intel from two programs: $5.7 billion from the U.S. CHIPS and Science Act and $3.2 billion from the Secure Enclave program, which provides chips for the U.S. Department of Defense.
When the US government bailed out GM about 15-20 years ago, did they take shares of GM in return? Maybe this is similar? Intel is on a path of irrelevancy (due to a decade of bad decision making by management), and there is the hope that this infusion of money may “bail them out” and keep them alive and kicking.
It’s also a form of subsidy, yes? INTC has new shares they offered, and sold, resulting in an infusion of cash. I thought Republicans didn’t like the government “choosing winners”. I guess if it’s a Republican doing it, it’s fine.
On some level, I do agree with the concept. Not commenting on this particular transaction, but there are some resources and materiel that can be critical. Trivial example: masks. During COVID, we had no masks. They were made in China and Korea, and both were hoarding their masks for their own use. Even medical personnel here were having issues getting them. There were (and probably still are) domestic makers, but they are more expensive. It would make sense for government to own a share of some potentially critical products so it can make sure we have them when we need them. Masks, military-grade steel (armor), microchips of various sorts, etc.
If the government really not interested in giving the grants, they could have simply canceled it. There is only one reason… POTUS wanted to show the world, if he want he can takeover any company. He made up a lie, then told the CEO, if you want to keep your job, sell me 10%. I am sorry if you feel this is somewhat similar to “made him an offer he couldn’t refuse”, because that is what it is.
For all those who are worried about dividends, etc… Watch how quickly, he will demand a board seat and start telling the company what they can and cannot do…
If you think it is similar to Chinese communism… yes it is.
I haven’t owned INTC in a long time. So, no position in this.
A new fab can cost $5B or more. Fab 32 cost $3B in 2007. It would be more now. Plus, if you build a new fab, you’re probably developing a new technology (i.e. small lithography, perhaps silicon on oxide, or something like that). So, $9B will probably buy you a nice fab (class 1) with a bit left over.
I don’t follow INTC closely, but from what little I hear, their problems are more management than technology.
Because intel sucks and has been run into the ground by poor management. So a perfect investment for the bankruptcy king.
Intel Has Lots of Problems. A U.S. Stake Won’t Help.
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In 2021, with the company already in crisis, new CEO Pat Gelsinger announced an ambitious plan to launch five new manufacturing processes in four years, an unheard-of pace. The goal was to get Intel’s technology back on track quickly after it had lost leadership to Taiwan Semiconductor Manufacturing and, like Taiwan Semi, provide service to outside customers.
So far, only the first of these five “nodes” can be considered a success, having made five different lines of Intel chips from 2021 to 2023. There have been three subsequent nodes, and each was a different sort of failure, allowing Intel’s main competitor, Advanced Micro Devices, to surpass its technology. AMD uses Taiwan Semiconductor to manufacture its chips.
The third of the five nodes was meant to launch Intel as a manufacturer for other chip companies. That didn’t happen, and it was used only sparsely by Intel. The fourth node was supposed to feature Qualcomm as the launch customer, but that went nowhere, and the node looks to have been scrapped. In the first half of 2025, Intel has earned $53 million from outside customers for its manufacturing segment, which featured an operating loss of $5.5 billion.
Personally I would like to see Intel succeed, if only for US strategic concerns. But I believe this only happened because the CEO came on bended knee and kissed the ring, even after being shamed and tweeted that he should be fired by you-know-who.
I’ll just add that I’m gobsmacked that those who complained about “picking winners and losers” are remarkably silent. I’m recalling IP endlessly talking about Obama’s tiny (by comparison) handout to Solyndra, now here’s a cash grab 20x larger, and…nothing.
Oh yeah, Equity. Question: when Intel is found to be dumping toxic runoff somewhere - or using forever chemicals - or I don’t know, endangering workers or something, do we expect the same government with an ownership stake to also prosecute them? It may never happen, but that’s why you don’t have government ownership of these sorts of companies. Well, one of many reasons, actually. (Does the Pentagon get coerced to buy Intel chips, even if AMD are better? Does Donald or other allies decide on the future direction even if they (supposedly) don’t vote the shares? Do they get a say in what the CEO compensation is, or if s/he should remain?
Ages ago, it was a big deal that Apple had flipped over to Intel chips/processors, they even had a booth at MacWorld in SF, where I picked this up… Since then, Apple moved on, developed their own, so as not to be under the thumb of Intel’s management games… This fellow sets up on a window ledge in my ‘office’, hasn’t jumped off, yet…
It was mostly due to bad management decisions. For some reason they refused to develop low-power chips (primarily for mobile, but a good technology to use everywhere), and said their focus has to remain on high powered general use (desktop, laptop) chips. That’s one of the many reasons Intel lost most of the major semiconductor battles of the last 10-15 years. And it’s very likely the main reason they lost Apple’s business.
Don’t expect this trend to end. 15% export tariffs on AMD, Nvidia. 10% stake in Intel. He wants leverage on private companies. We’re being run by a mob boss.
Here’s another - The government stake may impact Intel’s foreign business.
“Intel’s non-U.S. business may also be impacted by the U.S. government being a significant stockholder as this could subject the company to additional regulations or restrictions such as foreign subsidy laws in other countries, the filing said.
Sales outside the United States accounted for 76% of its revenue last year while revenue from China contributed 29% to total revenue.”
I don’t follow INTC since I sold them over a decade ago. However, I did work in semicon until I retired. Our company (I guess it’s OK to reveal it now that I don’t work there…Microchip Technology) had very specific targets. We didn’t try to compete with Intel on high-end chips. Ramping that would have been ruinous. We focused on microcontrollers; the chips that cost a couple of bucks each. Intel had a hand in that market, but were nowhere near the leaders. So far, Microchip has had no aspirations for filling the CPU socket. I’m assuming that is still the case (don’t know for certain since I no longer can attend internal communication meetings).
It’s not necessarily a bad thing to specialize, as long as there is a market, and you do it well. Microchip still made commodity EPROMs and EEPROMs, but that wasn’t the focus. 8 and 16 bit microcontrollers were the focus, and the market is ENORMOUS (they are in everything from cars to appliances to toys).
Just taking a swing here, but I suspect that Intel was largely a victim of its own success. For an average user, whatever the low-end that Intel (or AMD) is producing is probably good enough. I have my mom’s old i5, and it is still chugging along. The only issue is that Microsoft stopped supporting the Windows version, and it can’t handle the new Windows version. So I use it as a network storage device. My i7 is doing great. If Microsoft weren’t obsoleting me, I could probably keep using it for many years to come. I will continue to use it until forced not to.
Only some specialized applications, and gamers, really need more power. Running word processors, spreadsheets, and a browser can be done with older chips like mine. We don’t need the latest/greatest, because Intel provided a chip (in my case, the i7) that has more than enough horsepower to do it. I suspect most average users are in the same boat, only upgrading when forced to by Microsoft obsoleting their O/S.
