The Trump administration has tightened its hold on Intel’s business decisions. A new agreement links government funding to strict conditions on the company’s struggling foundry unit.
At a Deutsche Bank conference, Intel Chief Financial Officer David Zinsner confirmed the arrangement.
The U.S. government now holds a 10% equity stake in Intel. In addition, the deal discourages Intel from spinning out or selling its foundry unit in the near future.
The contract includes a five-year warrant. It allows Washington to claim another 5% of Intel at $20 a share if the company reduces its ownership of the foundry business below 51%.
Zinsner stated he expects this clause to expire unused.
Funding
Intel has already received $5.7 billion in cash as part of this deal. The payment comes from grants tied to the CHIPS and Science Act.
This was designed to rebuild domestic chip production. However, this funding comes with a burden.
Intel must continue operating a unit that has produced steep losses. In the second quarter, Intel Foundry reported an operating loss of $3.1 billion.
Some board members and investors have long pushed for a spin-off. They believe the foundry business weighs down Intel’s performance.
A sale seemed possible last year, before the sudden retirement of former CEO Pat Gelsinger, who had been the architect of the foundry plan.
Policy
The White House has not finalized all details of the deal. But the administration wants more semiconductor manufacturing inside the United States.
The motivation is not far-fetched. During the pandemic, chip shortages disrupted industries worldwide.
Automakers delayed new models. Electronics became scarce. Prices climbed sharply. Policymakers aim to avoid another crisis by securing production at home.
Risks
Intel must revive its foundry business while competing with established rivals such as TSMC and Samsung. These firms have decades of expertise and lower production costs.
Therefore, forcing Intel to keep an unprofitable unit may drain resources and slow recovery.
Yet, there are arguments that government support could buy Intel time to improve operations and eventually regain ground.
