Thursday, November 28th 2024
Intel's $7.86 Billion CHIPS Act Grant Forbids Selling Its Foundry Business
When Intel announced the completion of its $7.86 billion CHIPS Act grant from the Biden-Harris administration on Tuesday, we assumed some special terms were tied to the grant. Intel is essentially making a law-abiding promise to the US government that it will not sell its stake in the Intel Foundry unit under any circumstances, even if it manages to become an independent entity. This ensures that Intel is the major voting party in any event. Intel disclosed in a regulatory document that if Intel Foundry becomes its own private entity, Intel must maintain majority control with at least 50.1% ownership to keep its subsidy agreements. Additionally, if Intel Foundry goes public in the future, no single investor would be allowed to acquire more than 35% of shares unless Intel remains the largest shareholder, as this would trigger control-change clauses.
This essentially positions Intel Foundry as too big and too important of a unit to fail, both for Intel and the US government. Given Intel's ties with the US Department of Defense, with up to $3 billion in direct funding under the CHIPS and Science Act for the Secure Enclave program, Intel is vital for providing the US government with advanced semiconductor manufacturing. Strategically, Intel Foundry is the sole US-based company that competes with advanced manufacturing companies such as TSMC and Samsung. Even with TSMC and Samsung driving investments on US soil with advanced fabs, Intel's work with the government requires additional safety and secrecy clearances that only a US firm could provide. In the latest Q3 2024 financial results, Intel Foundry recorded a revenue of $4.4 billion with $5.8 billion in losses. While the operating marking of negative 134.3% seems like a disaster, upcoming quarters will bring it to a positive with more customers and using already developed nodes like 18A.
Source:
Reuters
This essentially positions Intel Foundry as too big and too important of a unit to fail, both for Intel and the US government. Given Intel's ties with the US Department of Defense, with up to $3 billion in direct funding under the CHIPS and Science Act for the Secure Enclave program, Intel is vital for providing the US government with advanced semiconductor manufacturing. Strategically, Intel Foundry is the sole US-based company that competes with advanced manufacturing companies such as TSMC and Samsung. Even with TSMC and Samsung driving investments on US soil with advanced fabs, Intel's work with the government requires additional safety and secrecy clearances that only a US firm could provide. In the latest Q3 2024 financial results, Intel Foundry recorded a revenue of $4.4 billion with $5.8 billion in losses. While the operating marking of negative 134.3% seems like a disaster, upcoming quarters will bring it to a positive with more customers and using already developed nodes like 18A.
14 Comments on Intel's $7.86 Billion CHIPS Act Grant Forbids Selling Its Foundry Business
We only keep getting bold statements by Intel's staff and "We shall prevail in 2025, trust me" by Patty Promise-singer aka Pat Gelsinger.
Take this two above quoted senteces not with a bit of salt, but more like with tons of it. Submerge yourself in the salt already!
The only way to work with the requirement is for Intel to stop making it’s own chips. The incompetence of both Intel and the US government means these two are a match made in heaven.
www.techpowerup.com/329264/qualcomm-abandons-intel-takeover-focuses-on-division-acquisitions
Given your irritation towards an Intel acquisition, which camp are you in: people who love Intel so much and can’t stomach the fact that Intel has fallen so badly that they could be bought or people who realize Intel is doing so badly that no one in their right mind would buy them?
The biggest issue right now is Intel's (x86) fixed at the hips with IFS; but that needs to change completely for them to recover!