Written by Stephen Nellis
(Reuters) – Intel said on Wednesday an agreement over a $7.86 billion U.S. government subsidy would limit its ability to sell stakes in its chip manufacturing unit if it were to become independent.
The U.S. Department of Commerce announced on Tuesday that it would give Intel part of the $39 billion in subsidies to boost chip manufacturing in the U.S., including to Taiwan Semiconductor Manufacturing.
Intel CEO Pat Gelsinger said in September that the company plans to turn its chip manufacturing business into a subsidiary and is open to outside investors for a division called Intel Foundry.
Intel said in a securities filing Wednesday that the subsidy will require it to own at least 50.1% of Intel Foundry if the division is split into a new private entity. If Intel Foundry were to become a public company and Intel itself was not the largest shareholder, the company could sell only 35% of Intel Foundry’s stock to a single shareholder before running into change of control provisions.
Intel did not immediately respond to a request for comment on the disclosure. A Department of Commerce spokesperson said the government is negotiating change of control provisions with all direct grant recipients.
Intel must comply with the restrictions if it is to continue building cutting-edge chips in the U.S. with $90 billion worth of projects in Arizona, New Mexico, Ohio and Oregon, according to the filing. Any change in control may require Intel to obtain approval from the U.S. Department of Commerce, the filing states.
(Reporting by Stephen Nellis in San Francisco; Editing by Cynthia Osterman)
