There continues to be a lot of conflicting info out there, but Intel's press release is I assume the most accurate summary: It comes down to, the U.S. "investment" is paying Intel the money it was already supposed to receive under prior programs, like the CHIPs Act --
It sounds a bit socialist, the government owning part of a business. I thought the GOP was against socialism.
More sleight-of-hand and deception to advance their own corruption.$$$$
I was hoping the $0.001 par value would become interesting.
unlikely
As an executive that runs private equity, this is a great investment for both parties. The U.S. is really only releasing existing grants, and a tad of new capital and gets to buy the shares at below market. In return, Intel gets a big slug of capital, with no governance attached.
it's an extortion, period, end of story
Intel was entitled to the slug without diluting existing shareholders. The real new benefit to Intel is perceived govt favoritism.
which they will find out to be a huge disappointment
The U.S. then gets more shares than that nominal dollar amount should be worth, i.e., the U.S. is getting a discount. I gather that to some extent, Intel frees itself of some obligations it would otherwise have had due to govt grants.
Very helpful analysis; thank you! Do you think this means Intel will then not have to fulfill the requirements of the CHIPS Act, like building research and production facilities in the US?
Nothing in the press release says they're released from that obligation and I doubt Trump would permit it, but again, really hard to say until we know more. And we will; they'll have to disclose the terms eventually. I rather the suspect the dox are still being drafted.
Thank you for helping me understand!
So he held back legally entitled grants in exchange for shares. How will these shares be held, titled? Who is desig rep?
"The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions."
And Big Vinny is only going to stand on the corner by your tailor shop. We take 10%, but don't worry, we won't tell you what to do.
I do not know what this means. My best guess is govt gets nonvoting shares but if law requires that even nonvoting shares get to vote on specific matters, govt votes w/ board recommendation. But I'm not sure.
Can the board in effect set aside a group of shares that will always support the boards decision? Meaning it dilutes the power of the shareholders that they now must get 60% of shareholders to be able to override the board.
Yes, boards do it all the time. If they're doing it for the purposes of entrenchment under some circumstances a court might apply extra scrutiny, but this is only 10%, and it's not for entrenchment purposes. (I'm still not clear if it's voting stock but assuming it is)
Turns to @curtismorrison.bsky.social "Wow that's wild"
It is wild.
"The government will receive a five-year warrant, at $20 per share for an additional five percent of Intel common shares, exercisable only if Intel ceases to own at least 51% of the foundry business."
As a practical matter, this looks similar to what Trump is doing w/ universities: withholding congressionally mandated funding, unless the recipient meets a demand. In this case, a demand for an equity interest in the company.
Thanks for the explanation. Do you think this agreement can be unwound by a new administration?
Well, if Intel agrees, it can do anything. Without Intel's agreement, very hard to say without knowing precisely the terms.
I'm an Intel shareholder. I should call up investor relations for the text of the agreement. 😁 Though I imagine they'd have to file something with the SEC any way.
yes they will
The Unitary Extortionist Theorem.
Yep, this 100%.
I'll add: I don't know what "no governance rights" means. It could be no voting rights; it could be ordinary voting rights, and separate the Trump Admin promises to vote with Board recommendations. If the latter, it is ... amusing ... to imagine how Intel would enforce terms.
As the largest shareholder, even without voting rights, they can still greatly influence the board simply with more threats.
Does Intel sue at all? Does the Delaware Court of Chancery enjoin the federal government? Does Chancery even have jurisdiction or is this, like, a Court of Federal Claims issue? Anyhoo, we need to see those terms.
Would it be possible to put the shares into some kind of trust structure, where voting rights are exercised by the Board on behalf of the US and the Gov has no ability to intervene except in “limited circumstances”? Yes, very curious to see actual terms and if there’s any pretense of legality!
It would be possible, but it doesn't sound like that's what they're doing.
📌
Let me guess, the forum selection clause requires all disputes to be heard before the Texas Temu chancery court and the federal government waives sovereign immunity only as to that court and does so indefinitely.
Where does this leave Intel’s competitors? If I’m them, I’m super WTF about future contracts and influence
Yup. That's I assume why Intel's stock is up
I bought one share of Intel today just so I could be part of the class action.
it would be a derivative action and you're too late. can't buy a lawsuit
lol and does it mean that the admin will vote with the board, but also, board, btw, were raiding the homes of people we don’t agree with these days, just fyi.
Wonder what their shareholders are going to think of that.
stock price is going up so they don't seem to be objecting. the main benefit is, US now has incentive to use its regulatory power to benefit Intel. And Intel counterparties perceive that the US will favor Intel. Etc.
At least until the next shakedown scores them another 10%, eh?
Reads like it’s just regular common stock with an agreement (or maybe just a pinky swear promise) to vote with the Board.
I can't tell because I don't know what "no governance rights" means. There certainly are some matters that even nonvoting stock would be legally required to have a vote on (like, amendments to the nonvoting stock's rights)
A shakedown by any other name is still a shakedown.
All chips now come with a free embedded MAGA surveillance processor. In honor of Trump, it's gold and called the Fascium II.
Kleptocracy
But now it will go straight into DT’s pocket? Somehow probably