By John Smith
(Reuters) – In a recent announcement, Intel (NASDAQ:) revealed that the $7.86 billion U.S. government subsidy it received comes with certain restrictions that could impact its plans to sell stakes in its chipmaking unit if it becomes an independent entity.
The U.S. Commerce Department’s decision to grant subsidies to Intel, along with other companies like Taiwan Semiconductor Manufacturing Co, is part of a larger $39 billion initiative aimed at boosting chip manufacturing within the United States.
Intel’s CEO Pat Gelsinger had previously expressed intentions to spin off the company’s chip manufacturing operations into a subsidiary named Intel Foundry, with the possibility of bringing in external investors. However, according to a recent securities filing, the subsidies dictate that Intel must maintain a minimum ownership stake of 50.1% in Intel Foundry if it is separated into a new privately held legal entity. Additionally, if Intel Foundry transitions into a public company where Intel is not the largest shareholder, the company can only sell up to 35% of Intel Foundry to a single shareholder before triggering change-in-control provisions.
When questioned about these restrictions, Intel did not provide an immediate response. A spokesperson for the Commerce Department mentioned that negotiations regarding change-in-control provisions are ongoing with all direct grant recipients.
Compliance with these restrictions is crucial for Intel to proceed with its $90 billion projects in Arizona, New Mexico, Ohio, and Oregon, as well as to sustain the manufacturing of advanced chips within the U.S. Any changes in control would necessitate Intel seeking approval from the U.S. Department of Commerce, as outlined in the filing.