Intel's $7.86 billion subsidy agreement restricts the sale of equity in its manufacturing division
Nov 28,2024
Intel announced on November 27th that the $7.86 billion in US government subsidies it received limited the company's ability to sell its shares after the chip manufacturing division became an independent entity.
The US Department of Commerce announced on November 26th that it will provide subsidies to Intel, as part of the $39 billion subsidy provided by the US government to the industry, including TSMC, to revitalize the US chip manufacturing industry.
Intel CEO Pat Gelsinger announced in September that the company plans to spin off its chip manufacturing business into a subsidiary and is willing to bring in external investors for the division, known as Intel foundries.
Intel stated in a securities filing on November 27th that if the division were to split into a new privately held legal entity, subsidies would require it to own at least 50.1% of the shares in Intel's contract manufacturing plants. If Intel's foundry becomes a publicly traded company and Intel itself is not the largest shareholder, then the company can only sell 35% of Intel's foundry shares to any individual shareholder, otherwise it will violate the change of control clause.
According to the document, Intel needs to comply with these restrictions in order to continue its $90 billion projects in Arizona, New Mexico, Ohio, and Oregon, and to continue producing cutting-edge chips in the United States. The document states that any change in control may require Intel to seek permission from the US Department of Commerce.
The US Department of Commerce announced on November 26th that it will provide subsidies to Intel, as part of the $39 billion subsidy provided by the US government to the industry, including TSMC, to revitalize the US chip manufacturing industry.
Intel CEO Pat Gelsinger announced in September that the company plans to spin off its chip manufacturing business into a subsidiary and is willing to bring in external investors for the division, known as Intel foundries.
Intel stated in a securities filing on November 27th that if the division were to split into a new privately held legal entity, subsidies would require it to own at least 50.1% of the shares in Intel's contract manufacturing plants. If Intel's foundry becomes a publicly traded company and Intel itself is not the largest shareholder, then the company can only sell 35% of Intel's foundry shares to any individual shareholder, otherwise it will violate the change of control clause.
According to the document, Intel needs to comply with these restrictions in order to continue its $90 billion projects in Arizona, New Mexico, Ohio, and Oregon, and to continue producing cutting-edge chips in the United States. The document states that any change in control may require Intel to seek permission from the US Department of Commerce.