plowunited.net – Intel no longer faces some original CHIPS Act requirements after the US government took a 10% stake in the company. According to a Wall Street Journal report, Intel announced in a recent filing that it can receive government funding once it proves spending of $7.9 billion on agreed projects. Reuters confirms Intel has already spent $7.87 billion on eligible CHIPS Act projects.
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This change means Intel no longer must share a portion of its cumulative cash flow from each project with the Commerce Department. The company also avoids several CHIPS Act workflow policy obligations and other restrictions. However, Intel still cannot use the government funds to pay dividends or buy back shares.
The shift came after the government chose to invest directly in Intel stock rather than continue with the original CHIPS Act funding deal. Intel CEO David Zinser revealed that the company received $5.7 billion from the government recently. This payment stems from the $8.9 billion total government investment. Combining the previously earmarked $5.7 billion and $3.2 billion from the Secure Enclave program.
Background and Implications of the Government’s Stake in Intel
The revised funding deal followed intense discussions between Intel CEO Lip-Bu Tan and former President Donald Trump. Trump publicly called for Tan’s resignation, leading to a meeting that resulted in the government acquiring a 10% ownership stake. Trump stated, “He walked in wanting to keep his job and he ended up giving us 10 billion dollars for the United States.”
Intel has also received $2.2 billion in CHIPS Act grants, bringing total government involvement to $11.1 billion. The new arrangement aims to support Intel’s domestic manufacturing goals while offering taxpayers potential returns via equity.
Despite relaxed requirements, Intel remains restricted from using government funds for dividends or share repurchases. Ensuring funds focus on growth projects. The shift highlights a broader government strategy to bolster critical semiconductor manufacturing capacity through investment and equity stakes.
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Looking ahead, Intel’s collaboration with the government could improve supply chain resilience and domestic chip production. The company’s ability to meet funding milestones with more flexibility may accelerate its expansion plans. However, Intel must still deliver on performance to justify the significant public investment and maintain public trust. Success in this partnership could boost US technological leadership, create jobs, and encourage further innovation.
Overall, this new funding framework reflects evolving government approaches to supporting vital industries while balancing oversight and shareholder interests. It could set a precedent for future public-private partnerships in technology sectors.
