With 10% of Intel worth around $10.5 billion, the government money would cover the value of the investment. Intel shares fell 3% on the Bloomberg story. However they rose 5% in after-hours trading when Softbank agreed to buy $2 billion worth of Intel shares at $23 apiece which was seen as a bet on an Intel recovery.
It is being said that the same process of converting Chips Act grants into equity could be applied to other recipients of Chips Act funds.
A benefit for Intel of the grants-for-equity approach could be that Intel gets the Chips Act money in its entirety quite soon instead of in instalments as it meets agreed targets on its turnaround project. In January Intel had only received $2.2 billion out of the total $10.9 billion.
The news of the possible grants-for-equity arrangement suggests that the partnership envisaged between the government and Intel is limited rather than open-ended support. The government would become Intel’s biggest shareholder.
Softbank’s $2 billion investment makes it Intel’s sixth biggest investor. “This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role,” said SoftBank Group CEO and chair Masayoshi Son.
Intel CEO Lip-Bu Tan said SoftBank and Son share “our commitment to advancing U.S. technology and manufacturing leadership … and I appreciate the confidence he has placed in Intel with this investment.”
