Intel rises even as it says new US stake ups risks

[Intel headquarters in Santa Clara, California, USA]
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Intel (NASDAQ:INTC [https://seekingalpha.com/symbol/INTC]) shares rose 1% on Monday — though off their best levels of the session — as the company laid out [https://seekingalpha.com/filing/10337345] new risk factors associated with the U.S. federal government's stake [https://seekingalpha.com/news/4488563-u-s-investment-in-intel-a-terrible-decision-bad-for-almost-everyone-cato-institute] in the embattled chipmaker.

Led by CEO Lip Bu-Tan, Intel said the deal — [https://seekingalpha.com/news/4488523-intel-confirms-massive-11_1b-investment-by-us-government] which gives the U.S. government a roughly 10% stake in the company — could impact its ability to receive grants and funding from the government and impact international sales.

“The timing of consummation of the transactions and the receipt of funding, and the ability to satisfy the conditions to funding, remain uncertain,” the company said in the filing [https://seekingalpha.com/filing/10337345].

Intel also said that the deal could “cause other government entities to seek to convert their existing grant arrangements with the Company into equity investments or be unwilling to support the Company with future grants, either of which could limit the Company's access to capital, increase the Company's cost of capital, or increase the Company's future operating costs.”

The Santa Clara, Calif.-based Intel also explained the transactions are “dilutive” to existing stockholders. In addition, if the U.S. government exercises its warrant to buy additional shares, further “significant additional dilution” could be forthcoming, Intel added.

Lastly, given that 76% of Intel's sales in fiscal 2024 occurred outside the U.S., having the U.S. federal government as a significant shareholder could result in it dealing with “additional regulations, obligations or restrictions, such as foreign subsidy laws or otherwise, in other countries,” the company warned.

On Monday, Kevin Hassett, director of the National Economic Council, said [https://seekingalpha.com/news/4488716-the-us-stake-in-intel-may-be-the-beginning-of-a-us-sovereign-wealth-fund-hassett-says] the Intel deal may the form the base of a U.S. sovereign wealth fund.

MORE ON INTEL CORPORATION

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* Intel Value Deteriorates As Competition Intensifies And Foundry Capex Continues [https://seekingalpha.com/article/4816105-intel-value-deteriorates-as-competition-intensifies-and-foundry-capex-continues]
* Intel: Interested Parties Do Not Necessarily Interest Me [https://seekingalpha.com/article/4815738-intel-interested-parties-do-not-necessarily-interest-me]
* The U.S. stake in Intel may be the beginning of a U.S. sovereign wealth fund, Hassett says [https://seekingalpha.com/news/4488716-the-us-stake-in-intel-may-be-the-beginning-of-a-us-sovereign-wealth-fund-hassett-says]
* U.S. investment in Intel a 'terrible decision bad for almost everyone' - Cato Institute [https://seekingalpha.com/news/4488563-u-s-investment-in-intel-a-terrible-decision-bad-for-almost-everyone-cato-institute]