As you may well know, the US government recently took a 10% equity stake in Intel worth US$8.9 billion (~RM37.5 billion), in an effort to help the ailing company, as well as a private American technology company. Now the blue chipmaker is of the belief that the move could hurt its business in the long run.
In a recent securities filing by Intel, the company laid out risk factors that included putting a dent in its international sales and more importantly, it could potentially hamper the procurement of future grants from the government. Under the new agreement, the current Trump administration will purchase Intel shares with US$5.7 billion (~RM24 billion) in unpaid grants from the Biden-era CHIPS Act, while the remaining US$3.2 billion (~RM13.49 billion) will be awarded to Intel under the Secure Enclave program, also from the Biden era.
“To the maximum extent permissible under applicable law,” Intel’s obligations under the CHIPS Act will be considered discharged, barring the Secure Enclave program, according to the filing.
While the US government own a stake in Intel, it is understood that the stake will be passive. It will not take board seats or gain governance rights but has pledged to vote alongside Intel’s directors on shareholder matters, except in limited circumstances. The deal also includes a five-year warrant allowing the government to purchase an additional 5% of Intel shares at US$20 (RM88.40) per share, exercisable only if Intel’s control of its foundry business drops below 51%.
(Source: Reuters)
