Will Trump Do More Harm Than Good to Intel? "A Threat to Business"

The company outlined the new risk factors in a securities filing after the government decided to convert $11 billion in government grants into shares in Intel , Reuters reported.

Intel CEO Lip-Bu Tan said in a video released Monday by the Commerce Department that the company does not need government funding.

"I don't need a grant," Tan said. "But I'm really happy that the U.S. government will be my shareholder."

Is the Intel transaction a precedent for other entities?

Intel's filing, however, raised questions about the U.S. investment. The company noted, for example, that it was uncertain whether the deal might lead other government entities to try to convert existing grants into capital investments or whether they would be reluctant to support future grants.

Intel shares will be acquired from unpaid grants totaling $5.7 billion from the CHIPS and Science Semiconductor Subsidy Act of 2022 and $3.2 billion awarded to Intel for the Secure Enclave program last year under Trump's predecessor, President Joe Biden.

According to these documents, "to the maximum extent permitted by applicable law," Intel's obligations under the CHIPS Act will be deemed satisfied, excluding the Secure Enclave program.

Government shareholding creates the risk of additional restrictions

The documents said Intel's operations outside the United States could also be affected by the fact that the U.S. government is a significant shareholder, as it could expose the company to additional regulations or restrictions, such as foreign subsidy laws in other countries.

Sales outside the United States accounted for 76% of the company's revenue last year, with revenue from China alone accounting for 29% of total revenue.

The U.S. deal with Intel comes shortly after Tan met with Trump, who demanded his resignation due to his ties to Chinese companies . The company also said the shares, which are to be issued to the U.S. government at a discount to the current market price, are dilutive to existing shareholders.

The government is buying Intel shares at a $4 discount to Friday's closing price of $24.80. Intel shares rose 2% in early trading on Monday, to $25.25.

The filing states that the government's significant additional powers over laws and regulations affecting a company could limit a company's ability to make deals that benefit shareholders.

The United States government is a shareholder of Intel

On Saturday, August 23, Intel announced that under the terms of the agreement, the U.S. government will invest $8.9 billion in the company's common stock , reflecting the administration's confidence in the company's ability to advance key national priorities and its critical role in developing the nation's semiconductor industry.

Intel is currently undertaking a significant expansion of its domestic chip manufacturing capacity, investing more than $100 billion to expand its U.S. facilities.