Intel is rescued

SoftBank and the US government both plan to invest and buy shares in Intel, hoping to revive the US chip industry icon.

SoftBank has just announced the purchase of $2 billion worth of Intel shares. This is seen as a move to expand the Japanese company's investment in the US, while also placing its trust in the struggling chipmaker.

Intel is in crisis as it fails to catch up with rivals in the AI race. SoftBank’s agreement to buy Intel shares comes after the US government considered a similar move to support its chip factory plans and help revive the company.

SoftBank investment

SoftBank said in a statement on August 18 that it will pay $23 per share for Intel common stock. The company described the deal as “reaffirming its commitment” to semiconductor innovation in the United States, and that it will be subject to customary closing conditions.

The investment represents a roughly 2% stake, making SoftBank Intel's fifth-largest shareholder, according to FactSet .

Intel shares rose about 5% in late trading following the announcement, reaching $23.66 in New York, Bloomberg reported.

Intel shares lost about 60% of their value last year, the biggest drop in more than half a century of listing. They are up about 18% so far this year.

SoftBank is steadily expanding its operations in the US. In August, the company reached an agreement to buy Foxconn’s electric vehicle plant in Ohio and partnered with OpenAI and Oracle to create the Stargate data center.

Intel aims to return to technological leadership after a period of lag in the chip industry. SoftBank's latest announcement also pays homage to Intel's pioneering history.

SoftBank CEO Masayoshi Son. Photo: Bloomberg .

“For more than 50 years, Intel has been a trusted leader in innovation.

“This strategic investment reflects our belief that the production and supply of advanced semiconductors will continue to expand in the US, with Intel playing a key role,” said SoftBank CEO Masayoshi Son.

Intel CEO Lip-Bu Tan himself has decades of experience in the chip industry. Both leaders have worked there before.

“We are pleased to deepen our relationship with SoftBank, a leader in so many emerging technology and innovation areas, and underscore our commitment to advancing technology and manufacturing leadership in the United States.

I appreciate the trust he has placed in Intel with this investment,” Tan said.

SoftBank has gradually become a "giant" in the global chip and AI market. In 2016, the company acquired chip designer Arm for about $32 billion .

In March, SoftBank announced plans to acquire chip designer Ampere Computing for $6.5 billion . The company also led a $40 billion investment in OpenAI, the largest private tech deal ever.

Helped by the US government ?

On the same day, August 18, a White House official said that the administration of US President Donald Trump is discussing the possibility of holding about 10% of Intel shares. If the information is correct, the US government will be the company's largest shareholder.

According to Bloomberg , the US government is considering converting some (or all) of the CHIPS Act investment into equity, an investment equivalent to $10.9 billion for commercial and military production.

The figure is nearly enough to cover the stake the US wants to buy. Given Intel’s current market capitalization, a 10% stake would be worth about $10.5 billion . However, the specific value and official decision from the White House have not been confirmed. The parties involved all declined to comment.

The biggest question is whether Intel’s business will recover even with government support. Right now, the company is suffering from stagnant sales and continued losses while struggling to regain its technological edge.

New CEO Lip-Bu Tan has focused on cutting costs and jobs in the past few months. Using the CHIPS Act funds means Intel will retain the money it receives from the government, but it will be able to get it back sooner.

Percentage of investments under the CHIPS Act by the Joe Biden administration. Photo: Bloomberg .

Like other companies benefiting from the CHIPS Act, Intel’s funding is expected to be disbursed in phases. As of January, the company had received $2.2 billion in funding.

It is unclear whether the $2.2 billion Intel has already received will be converted into equity. Most of the CHIPS Act funding was approved under the previous administration of Joe Biden, and it is not certain that Intel will receive additional funding under Trump.

Last week, Tan discussed Intel’s future with Trump at the White House. The president had previously tweeted his disagreement with the Intel CEO, calling for his resignation over his past dealings with China.

After the meeting, Mr. Trump again praised Tan for “a great story.” According to insiders, he will continue to hold the position of CEO of Intel despite previous criticism.

Trump's strategy

The future of Intel is a headache for the Trump administration. Once a symbol of American semiconductors, Intel has fallen behind rivals like TSMC in manufacturing the tiny electronic components that power everything from smartphones to AI.

While TSMC and Samsung are ramping up production in the US, encouraging companies like Intel to produce advanced chips at home remains a top priority for both the Trump and Biden administrations.

But Intel’s foundry business, which makes chips for other companies, has yet to find a major customer. In July, the company admitted it was waiting for more orders before deciding to increase investment in its foundry.

Intel CEO Lip-Bu Tan. Photo: Reuters .

Under former President Joe Biden, officials even considered the idea of Intel partnering with GlobalFoundries. Earlier this year, the Trump administration discussed with TSMC to operate an Intel factory, but the Taiwanese company backed out.

Another idea Trump officials have considered is seeking investment in the UAE, though it’s unclear whether those plans will materialize.

The acquisition of Intel shares shows that the US government wants to play a bigger role in strategic areas. Previously, the Trump administration reached an agreement to receive 15% of chip sales to China, and at the same time hold a “golden stake” in US Steel Corp, gaining the largest control after the steel company was sold to Japan’s Nippon Steel.

In July, the US Department of Defense surprised the world by announcing a $400 million purchase of preferred stock in rare earths producer MP Materials. The deal made the Pentagon the company’s largest shareholder, with a roughly 15% stake.

Source: https://znews.vn/intel-duoc-giai-cuu-post1578101.html