Intel's $7.86 Billion Subsidy Deal Limits Sale of Chip Manufacturing Unit

Intel has revealed that the $7.86 billion in US government subsidies it has secured restricts its ability to sell stakes in its chip manufacturing subsidiary, should it become an independent entity, as per a report by Stephen Nellis for Reuters.

Intel CEO Pat Gelsinger announced in September that the company plans to spin off its chip manufacturing arm, Intel Foundry, into a separate subsidiary and was open to external investments. I Photo: Siemens Digital Industries

The subsidy is part of a broader $39-billion effort by the US Commerce Department to bolster domestic semiconductor manufacturing, including support for Taiwan Semiconductor Manufacturing Co. (TSMC) and other industry leaders.

Intel CEO Pat Gelsinger announced in September that the company plans to spin off its chip manufacturing arm, Intel Foundry, into a separate subsidiary and was open to external investments.

However, a securities filing indicates the subsidy conditions require Intel to maintain at least 50.1% ownership of Intel Foundry if the unit becomes a private entity.

Should Intel Foundry become publicly traded, Intel would be restricted to selling no more than 35% of shares to a single shareholder without triggering change-in-control provisions.

Any such changes would require approval from the US Department of Commerce, to ensure the continuation of Intel’s $90 billion worth of projects across states such as Arizona, New Mexico, Ohio, and Oregon.