Intel’s deal with Trump includes a penalty clause against selling off its fabs
(2025/08/29)
- Reference: 1756482903
- News link: https://www.theregister.co.uk/2025/08/29/intel_trump_deal_fab_selling_penalty/
- Source link:
Intel's agreement with the US government incudes a clause that would allow the feds to take an additional five percent stake in the chipmaker if it ceases to have a controlling share in its foundry business.
Trump's administration last week [1]took a 10 percent equity stake in the ailing semiconductor giant, taking Intel shares in exchange for the $5.7 billion in outstanding grants it had already been awarded under the CHIPS Act.
On Thursday, an Intel exec explained that the deal includes a clause to try and deter Chipzilla from selling off its lossmaking foundry division, by including a five-year warrant that allows Washington to take an additional five per cent of the company should it cease to own 51 percent of its silicon manufacturing facilities.
[2]
"It's a five-year warrant for what was roughly about five per cent of the shares outstanding. And we created a trigger that as long as we maintain a majority share of the foundry business, it would never trigger in that five-year period," said Intel CFO David Zinsner, speaking at Deutsche Bank's 2025 Technology Conference in California on Thursday.
[3]
[4]
"I think from the government's perspective, they were aligned with that. They didn't want to see us take the business and spin it off, or sell it to somebody. And so in some ways, you could view this as a little bit of friction to keep us from moving in a direction that, I think, ultimately, the government would prefer we not move to," he added.
The question of whether Intel would spin-off its foundry biz has cropped up again and again over the past year or two, as the firm recorded a whopping $18.8 billion loss for 2024. A bunch of [5]ex-Intel board directors called for this move, while Zinsner himself [6]discussed the possibility at another conference late last year.
[7]
However, it should be noted that the Biden administration had already thought of that – the CHIPS Act grant it gave Intel last year [8]came with conditions that it retain 50.1 percent ownership and/or voting rights in the foundry division should it ever be spun out.
Zinsner said that there was a significant amount of uncertainty as to whether Intel would actually ever receive the total CHIPS Act grant amount, so when the government suggested converting it to an equity holding, the company saw it as an opportunity.
"We were already thinking, we likely will need a little bit more cash on the balance sheet given that one of Lip Bu's core strategies is to solidify the balance sheet. And so this was a quick way to getting $5.7 billion in the door," he explained
[9]
"By the way, we have received it," he claimed. "We got it last night. So that's on the balance sheet. It eliminated the need to access capital markets in any other way in the near term."
On its manufacturing processes for making chips, Zinsner said Intel is now in "a really good place" on performance, making steady incremental improvement on yields with its 18A node, and the firm would take everything it learns to the more advanced 14A process.
"But there are differences. I mean with 18A, it was a process that we've intercepted early to make it a foundry node, whereas 14A from the ground up was always built to be a foundry node," he said, meaning that the chipmaker is preparing these for external foundry customers to use, rather than just being used to make the company's own products.
Zinsner said that its Panther Lake CPUs, which will use 18A, are still on track, with the first SKU due out by the end of this year, then more SKUs and the volume ramping up during 2026.
Zinsner disclosed pretty much the same thing at the [10]JP Morgan technology conference earlier this year, where he said the company needed external chip customers to make the 14A process node pay off.
The CFO also said that next year should be an interesting one, as Intel may get to a point where it can announce just such customers for its foundry biz.
"Lip Bu emphasized this. He's not declaring a customer win until it's a customer win with a real commitment and signature behind it. So all the pipeline stuff, obviously, we track internally, but we're not declaring anything until we've got somebody signed on the dotted line.
"But if we don't win a big customer next year, I don't think that takes us out of the window of opportunities for 14A. I think '27, we could win customers as well and that still would get us a good business on 14A," he added. ®
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[1] https://www.theregister.com/2025/08/23/us_government_snaps_up_10/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2024/10/23/intel_board_letter_foundry_spinoff/
[6] https://www.theregister.com/2024/12/13/intel_foundry_spinoff/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2024/11/29/intel_chips_act_grant_foundry_conditions/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2025/05/14/intel_14a_customers/
[11] https://whitepapers.theregister.com/
Trump's administration last week [1]took a 10 percent equity stake in the ailing semiconductor giant, taking Intel shares in exchange for the $5.7 billion in outstanding grants it had already been awarded under the CHIPS Act.
On Thursday, an Intel exec explained that the deal includes a clause to try and deter Chipzilla from selling off its lossmaking foundry division, by including a five-year warrant that allows Washington to take an additional five per cent of the company should it cease to own 51 percent of its silicon manufacturing facilities.
[2]
"It's a five-year warrant for what was roughly about five per cent of the shares outstanding. And we created a trigger that as long as we maintain a majority share of the foundry business, it would never trigger in that five-year period," said Intel CFO David Zinsner, speaking at Deutsche Bank's 2025 Technology Conference in California on Thursday.
[3]
[4]
"I think from the government's perspective, they were aligned with that. They didn't want to see us take the business and spin it off, or sell it to somebody. And so in some ways, you could view this as a little bit of friction to keep us from moving in a direction that, I think, ultimately, the government would prefer we not move to," he added.
The question of whether Intel would spin-off its foundry biz has cropped up again and again over the past year or two, as the firm recorded a whopping $18.8 billion loss for 2024. A bunch of [5]ex-Intel board directors called for this move, while Zinsner himself [6]discussed the possibility at another conference late last year.
[7]
However, it should be noted that the Biden administration had already thought of that – the CHIPS Act grant it gave Intel last year [8]came with conditions that it retain 50.1 percent ownership and/or voting rights in the foundry division should it ever be spun out.
Zinsner said that there was a significant amount of uncertainty as to whether Intel would actually ever receive the total CHIPS Act grant amount, so when the government suggested converting it to an equity holding, the company saw it as an opportunity.
"We were already thinking, we likely will need a little bit more cash on the balance sheet given that one of Lip Bu's core strategies is to solidify the balance sheet. And so this was a quick way to getting $5.7 billion in the door," he explained
[9]
"By the way, we have received it," he claimed. "We got it last night. So that's on the balance sheet. It eliminated the need to access capital markets in any other way in the near term."
On its manufacturing processes for making chips, Zinsner said Intel is now in "a really good place" on performance, making steady incremental improvement on yields with its 18A node, and the firm would take everything it learns to the more advanced 14A process.
"But there are differences. I mean with 18A, it was a process that we've intercepted early to make it a foundry node, whereas 14A from the ground up was always built to be a foundry node," he said, meaning that the chipmaker is preparing these for external foundry customers to use, rather than just being used to make the company's own products.
Zinsner said that its Panther Lake CPUs, which will use 18A, are still on track, with the first SKU due out by the end of this year, then more SKUs and the volume ramping up during 2026.
Zinsner disclosed pretty much the same thing at the [10]JP Morgan technology conference earlier this year, where he said the company needed external chip customers to make the 14A process node pay off.
The CFO also said that next year should be an interesting one, as Intel may get to a point where it can announce just such customers for its foundry biz.
"Lip Bu emphasized this. He's not declaring a customer win until it's a customer win with a real commitment and signature behind it. So all the pipeline stuff, obviously, we track internally, but we're not declaring anything until we've got somebody signed on the dotted line.
"But if we don't win a big customer next year, I don't think that takes us out of the window of opportunities for 14A. I think '27, we could win customers as well and that still would get us a good business on 14A," he added. ®
Get our [11]Tech Resources
[1] https://www.theregister.com/2025/08/23/us_government_snaps_up_10/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2024/10/23/intel_board_letter_foundry_spinoff/
[6] https://www.theregister.com/2024/12/13/intel_foundry_spinoff/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2024/11/29/intel_chips_act_grant_foundry_conditions/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aLHOlQjFu5hWFzbG10kmBwAAABQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2025/05/14/intel_14a_customers/
[11] https://whitepapers.theregister.com/