Intel to get $5.7B cash from US government with 10% equity stake

Intel said this week it has received a $5.7 billion cash payment from the U.S. government as part of a controversial agreement under which Washington will take roughly a 10 percent equity stake in the chipmaker, a transaction designed to keep Intel’s struggling contract-manufacturing arm, or foundry, under company control. The payment, Intel’s finance chief said on Wednesday, comes from remaining grant funds originally allocated under the CHIPS and Science Act and follows an amended funding agreement with the Commerce Department.

Chief Financial Officer David Zinsner disclosed the cash transfer at an investor conference and described key terms intended to discourage a spinoff of the foundry. The deal includes a five-year warrant that would allow the U.S. government to acquire an additional 5 percent of Intel at $20 a share if Intel’s equity in its foundry falls below 51 percent. Zinsner said he expects the warrant to expire unused and that from the government’s perspective “they didn’t want to see us take the business and spin it off or sell it to somebody.”

The arrangement converts billions in CHIPS Act grants into equity and, according to Intel filings, removes certain earlier...