Intel confirms massive $11.1B investment by US government

[Intel Lays Off 4000 Workers In Several States]
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The Trump Administration followed through with its intent to back Intel (NASDAQ:INTC [https://seekingalpha.com/symbol/INTC]) as the Santa Clara-based semiconductor firm confirmed a staggering $11.1B investment by the U.S. government.

The funding will come from several different avenues. Under the agreement, the U.S. will purchase $8.9B shares of Intel common stock. This will be funded by the remaining $5.7B in grants previously awarded, but not yet paid, by the U.S. CHIPS and Science Act. Another $3.2B will stem from the Secure Enclave program through the U.S. Department of Defense. The final $2.2B are grants Intel has already received from CHIPS.

"President Trump's focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country's economic and national security," said Intel CEO Lip-Bu Tan.

Under the deal, the U.S. will buy 433.3M shares at $20.47 each. This equates to a 9.9% stake in Intel, making it the largest investor in the company. It will be a passive ownership, meaning no board representation or other types of governance rights will be grant. The government will also receive a five-year warrant, at $20 per share, for an additional 5% of Intel common shares, exercisable only if Intel ceases to own at least 51% of the foundry business.

"As more companies look to invest in America, this administration remains committed to reinforcing our country's dominance in artificial intelligence while strengthening our national security," said U.S. Secretary of Commerce Howard Lutnick.

For its part, Intel has committed to investing more than $100B to expand its domestic chipmaking capacity.

"Intel plays a vital role as one of the country’s leading chip manufacturers, and we applaud the Trump administration's efforts to usher in a new era of American innovation in partnership with American companies," said Amazon Web Services (AMZN [https://seekingalpha.com/symbol/AMZN]) CEO Matt Garman.

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