Chipmaker Intel said that the Trump administration’s move to take an equity stake in the company could create a risk to its business in a regulatory filing.
President Donald Trump announced last week the federal government will take a roughly 9.9% equity stake in the struggling chipmaker in exchange for previously committed grants under the CHIPS Act.
Intel submitted a regulatory filing with the Securities and Exchange Commission (SEC) on Monday which explained the risk factors stemming from the government’s equity stake in the company could hurt aspects of its business.
Intel explained that its non-U.S. business could be impacted by the U.S. government becoming a significant stockholder, as the company may be subject to additional regulations or restrictions such as foreign subsidy laws in other countries.
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Intel’s sales outside the U.S. accounted for 76% of Intel’s revenue last year, while revenue from China accounted for 29% of total revenue.
The company said that there is uncertainty over whether other governmental entities will try to convert existing grants into equity investments, or may be unwilling to support future grants.
It also noted the “timing of consummation of the transactions and the receipt of funding, and the ability to satisfy the conditions to funding, remain uncertain.”
Intel explained that the funds aren’t required to be delivered at the time of closing and there “can be no assurance the Company will receive the funds on the timeline or in the amounts specified.”
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Additionally, the federal government’s equity stake could “limit potential future transactions that may be beneficial to stockholders,” because the federal government will have voting powers that reduce the voting influence of other shareholders when it comes to appointing members of the board or considering other proposals.
The deal also dilutes the voting influence of existing stockholders and Intel noted that they “may suffer significant additional dilution if the conditions to the Warrant are triggered and the Warrant are exercised.”
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President Trump defended the move in a post Monday on his Truth Social platform amid criticism of the federal government taking a stake in Intel.
“I PAID ZERO FOR INTEL, IT IS WORTH APPROXIMATELY 11 BILLION DOLLARS,” President Donald Trump wrote on his Truth Social platform. “All goes to the USA. Why are ‘stupid’ people unhappy with that? I will make deals like that for our Country all day long. I will also help those companies that make such lucrative deals with the United States States. I love seeing their stock price go up, making the USA RICHER, AND RICHER. More jobs for America!!! Who would not want to make deals like that?”
Trump previously called for Intel CEO Lip-Bu Tan to be removed from his role at the chipmaker over alleged ties to companies in China, but backed off those calls following a meeting with Tan this summer.
Tan said in a video posted Monday by the Commerce Department that the company didn’t need the government funding.
“I don’t need the grant,” Tan said. “But I really look forward to having the U.S. government be my shareholder.”
Reuters contributed to this report.
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