Intel gets $5.7 billion from Trump deal: CFO says it aims to save company from…

The Trump administration’s recent decision to acquire a 10% stake in Intel was strategically designed to prevent the struggling chipmaker from divesting its manufacturing unit, a business segment that has faced significant pressure to offload due to its unprofitability, David Zinsner, the company’s chief financial officer has said, adding that the deal aims to lock Intel into its domestic production capabilities.According to a report by Financial Times, the US government formally agreed to convert $8.9 billion in federal grants, allocated under the 2022 CHIPS and Science Act, into equity, effectively making the government a major shareholder in Intel. Zinsner addressed the implications of this clause during a Deutsche Bank conference this week. “I don’t think there’s a high likelihood that we would take our stake below the 50 percent, so ultimately I would expect [the warrant] to expire,” Zinsner stated. He further clarified the government’s intent behind this unusual arrangement: “I think from the government’s perspective, they were aligned with that: they didn’t want to see us take the business and spin it off or sell it to somebody.”

Details about Trump administration’s deal with Intel

The agreement includes a crucial provision: A five-year warrant that would allow the government to acquire an additional 5% of Intel at $20 per share if the company’s ownership of its foundry business falls below 51%. Intel Foundry Services (IFS) is Intel’s initiative to manufacture chips for third-party clients.“There’s likely going to be some opportunity for outside investors in foundry, and that will probably be our second opportunity to raise cash to fund the growth on the foundry side,” Zinser said.Meanwhile, White House press secretary Karoline Leavitt said that the Intel deal is still “being ironed out by the Department of Commerce.”