The Trump administration appears to be intended to manage Intel’s ability to make key business decisions around its flounder casting business unit.
At the Deutsche Bank meeting on Thursday, Intel’s CFO David Zinsner shared new details about the company’s recent deal with the Trump administration, which gave the US government a 10% stake, according to a report from the Financial Times.
The deal consisted of a way to punish Intel if they spin out a foundry business unit that creates custom chips for external customers in the coming years.
Last week’s contract included a five-year warrant that allowed the US government to make Intel’s 5% an additional 5% ($20 per share). Zinsner said he hopes the warrant will expire.
“From a government perspective, I think they were in line with that. They didn’t want to see us take a business and spin it off or sell it to someone,” he said.
Zinsner added that it received $5.7 billion in cash on Wednesday as a result of last week’s transaction, according to Reuters. (That cash comes from the remaining grants previously awarded, but has not yet been paid.
White House Press Secretary Karoline Leavitt told reporters today that the deal is still under resolution.
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Intel declined to comment on transactions that went beyond what Zinsner said.
This transaction structure is evidence of the Trump administration’s desire that many players in the industry rely on Taiwanese semiconductor manufacturers’ offshore manufacturing to bring more chip manufacturing to the US.
However, this warrant also forces Intel to maintain business units that are losing money. Intel Foundry reported an operating profit loss of $3.1 billion in the second quarter, making it a source of conflict in the semiconductor business.
There have been calls from analysts, board members and investors. This seemed to be something that could actually happen last fall.
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