[News] Intel’s USD 7.86 Billion Subsidy Deal under CHIPS Act Reportedly Limits Foundry Stake Sale

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Intel has finally secured the USD 7.86 billion in direct funding under the U.S. CHIPS Act a couple of days ago. However, there is a premise: the company would not be allowed to sell its stake in the chipmaking unit at will, according to the latest report from Reuters.

The report notes that the deal includes restrictions on the company’s ability to sell stakes in its chipmaking unit if it becomes an independent entity. This comes as part of a broader USD 39 billion initiative to boost semiconductor manufacturing in the U.S., which also involves companies like Taiwan’s foundry leader TSMC and others, Reuters adds.

In a securities filing seen by Reuters on Wednesday, the U.S. government subsidies Intel received impose conditions on its ownership of the foundry unit if the unit is spun off into a separate entity. Specifically, Intel must retain at least 50.1% ownership of Intel Foundry if it becomes a privately held company.

On the other hand, if the unit goes public and Intel is no longer the largest shareholder, the company would be limited to selling no more than 35% of Intel Foundry to any single investor before triggering change-in-control provisions, the report suggests.

According to the filing cited by Reuters, Intel must adhere to these restrictions to maintain its USD 90 billion worth of projects across Arizona, New Mexico, Ohio, and Oregon, and to continue producing advanced chips in the U.S. Any changes in control of Intel Foundry could require approval from the U.S. Department of Commerce​.

In mid-September, the struggling semiconductor giant settled down plans for restructuring after the board meeting, including schemes to transform its foundry business into an independent unit with its own board. Moreover, the strategy will reportedly allow the foundry business to explore “independent sources of funding.”

It is said that the move of carving out the foundry unit could help Intel in having a better chance of attracting tech heavyweights, such as Apple, Qualcomm, Broadcom, and even AMD.

According to a previous report from CNBC, the plan for Intel’s foundry unit to secure outside funding would be critical, as the business has weighed heavily on Intel’s finances, with the company spending around USD 25 billion on it annually over the past two years.

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