The company claimed in a securities filing on Monday that the new agreement, which is expected to stifle its ability to secure future government funding, could result from Kevin Hassett’s comments that the US might own shares of companies in the artificial intelligence (AI) and chip sectors. Taiwan Semiconductor Manufacturing and Advanced Micro Devices are two potential examples.
For the fiscal year that ended in December 2024, sales outside of the US made up 76% of Intel’s revenue. The company is moving forward with the deal even though China provided 29 percent of that.
Hassett told CNBC in an interview on Monday that “I think this is a very, very special circumstance because of the enormous amount of CHIPS Act spending that was coming in Intel’s way.”
“I’m certain that there will be more transactions, if not in this sector, then there will be other sectors,” he said.
The phrase “Creating Helpful Incentives to Produce Semiconductors” is used in the US legislation that Hassett was referring to.
US President Donald Trump said in a post on his social media platform, “I WILL MAKE DEALS LIKE THAT FOR OUR COUNTRY ALL DAY LONG,” echoing Hassett’s comments.
Following a meeting with CEO Lip-Bu Tan, Trump agreed to a deal with the troubled Silicon Valley tech giant. Trump had previously requested his resignation because of his previous investments in Chinese companies.
The US government will purchase Intel shares with $5.7 billion in unpaid grants from the President Joe Biden’s CHIPS Act in 2022 as part of the looming deal, which is anticipated to close as early as Tuesday. For the Secure Enclave program, which Biden created under CHIPS, Intel will receive an additional $3.2 billion.
According to the securities filing that lists new risk factors, “to the maximum extent permitted by applicable law,” Intel’s obligations under the CHIPS Act will be regarded as discharged, with the exception of the Secure Enclave program.
Additionally, the company claimed that existing stockholders would be diluted by the company’s proposed reduction in the amount of shares to be issued to the US government at a discount to the current market price.
The government will purchase Intel shares on Friday for $4 less than the company’s closing stock price of $ 24.80.
The government’s stake also lowers other stockholders’ ability to vote, and its substantial additional authority over laws and regulations that affect Intel may limit its ability to pursue transactions that benefit shareholders, according to the filing.
Trump added that the agreement, which he claimed will boost employment and income, “stupid people” are upset about.
However, the deal comes as Intel’s workforce undergoes extensive layoffs. By the end of 2025, the company announced last month that it would eliminate roughly 25, 000 jobs.
Customers have been hesitant to purchase Intel’s products despite the fact that semiconductors are exempt from tariffs due to economic uncertainty. In comparison to the same period last year, Intel reported a 3 percent decline in chip sales for the second quarter in late July.
Source: Aljazeera
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