The Trump administration appears to be exerting influence over Intel’s decision-making regarding its struggling foundry business unit, signaling a potential shift in the company’s strategic direction.
According to a report from the Financial Times, Intel’s CFO David Zinsner revealed new details about a recent agreement with the Trump administration, which granted the U.S. government a 10% equity stake.
The agreement includes provisions that would penalize Intel if it were to separate its foundry business unit, responsible for producing custom chips for external clients, in the near future.
As part of the deal, the U.S. government retains a five-year warrant that allows it to acquire an additional 5% stake in Intel at a predetermined price if the company’s ownership in its foundry business falls below a certain threshold. Zinsner indicated that the company anticipates this warrant to expire over time.
Intel received a cash infusion of $5.7 billion following the agreement, sourced from previously allocated but unpaid grants under the U.S. CHIPS and Science Act.
White House press secretary Karoline Leavitt stated that the terms of the deal are still under negotiation.
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Intel chose not to provide further comments on the agreement, in line with Zinsner’s statements.
This arrangement reflects the Trump administration’s efforts to boost domestic chip manufacturing in response to the industry’s reliance on offshore production, notably by Taiwan Semiconductor Manufacturing Company.
However, the agreement obliges Intel to retain a struggling business unit, Intel Foundry, which incurred a significant operating loss of $3.1 billion in the recent quarter, posing challenges for the semiconductor giant.
Despite calls from various stakeholders to separate the ailing foundry unit, the departure of former CEO Pat Gelsinger last year halted those plans, leaving the division’s future uncertain.
