Intel has said that the US government’s 10% stake in the company could negatively affect its international business and future funding opportunities, in a warning that came in a securities filing on Monday, in which the company outlined the potential fallout from President Donald Trump’s decision to convert previous government grants into an equity stake in the chipmaker, news agency Reuters reported.
The move is part of what Intel describes as new “risk factors”, highlighting the unusual step taken by the government and its subsequent implications.
Global Sales and Grants at Risk
In its filing, Intel said the government stake “could subject the company to additional regulations or restrictions such as foreign subsidy laws in other countries.” It also raised concerns that other governments might either follow suit or be discouraged from issuing future grants, as reported by Reuters.
“It is uncertain if this deal may result in other government entities trying to convert their existing grants into equity investments or if they might be unwilling to support future grants,” the company stated.
Sales outside the US remain key to Intel’s bottom line, accounting for 76% of total revenue in the last fiscal year, with China contributing 29%, the report said.
Deal Details and Shareholder Concerns
According to the report, the American stake will be funded by $5.7 billion in unpaid grants under the Biden-era CHIPS Act, as well as $3.2 billion from the Secure Enclave program, originally approved under President Joe Biden.
“To the maximum extent permissible under applicable law,” Intel noted, its CHIPS Act obligations would be considered fulfilled, while excluding the Secure Enclave program. The deal is expected to close on August 26.
Intel also flagged concerns about stockholder dilution, noting that the shares are being issued to the government at a four dollar discount from Friday’s closing price of $24.80.
The move, the report said, not only reduces the voting influence of existing shareholders, but also increases the government’s say in regulations that could affect Intel’s operations. According to the filing, this may “limit Intel’s ability to pursue transactions that benefit shareholders.”
The deal follows a meeting between President Trump and Intel CEO Lip-Bu Tan, who had reportedly faced pressure to resign over ties to Chinese firms.
