Intel flags business ‘risks factors’ as Donald Trump secures 10% US ownership
In what is being termed as an extraordinary intervention in corporate America since 2008, the US government recently announced to acquire a 10% stake in Intel. The deal was announced after Intel CEO Lip-Bu Tan’s meeting with Donald Trump, who had demanded his resignation over his ties to Chinese firms. Now, the chipmaker has said that the deal could pose risks to its business, reports news agency Reuters. In a securities filing, Intel laid out “risk factors” of the US government stake deal, from potentially harming international sales to limiting its ability to secure future government grants.
Business risks raised by Intel from stake deal with US government
In the US Securities and Exchange Commission (SEC) filings, Intel warns that its non-US business could also be impacted because of the deal. The filing says that due to US government stakes in Intel, the chip company could become subject to additional regulations or restrictions such as foreign subsidy laws in other countries. Notably, sales outside the US accounted for 76% of Intel’s revenue for the fiscal year ended December 28, 2024. China alone contributed 29% to the company’s total revenue.Further, the struggling chipmaker said that it is uncertain if this deal may result in other government entities trying to convert their existing grants into equity investments or if they might be unwilling to support future grants, the report says. As per the filing, the government’s stake also reduces the voting influence of other stockholders which in turn may limit Intel’s ability to pursue transactions that benefit shareholders.
US-Intel stake deal
As per a previous Reuters report, the US government has agreed to buy a 9.9% stake in Intel for $8.9 billion. It will buy 433.3 million Intel shares using $5.7 billion from CHIPS Act grants and $3.2 billion from the Secure Enclave program. Intel’s obligations under the CHIPS Act will be considered discharged “to the maximum extent permissible under applicable law,” barring the Secure Enclave program, the filing says.The US will pay $20.47 per share, about $4 less than the chipmaker’s closing price of $24.80. In the filing, Intel said that the shares to be issued to the US government at a discount to the current market price is dilutive to existing stockholders.
