$7.86B subsidy cost: Will limit Intel (INTC.US) selling its chip manufacturing business
1min read Intel(INTC.US) said on Wednesday that its $7.86bn subsidy deal with the US government limits its ability to sell shares in its chip manufacturing division after it becomes an independent entity. The US Commerce Department announced on Tuesday that it would provide subsidies of $39bn to the industry, including TSMC, and other efforts to revive the US chip manufacturing industry. Intel chief executive Pat Gelsinger said in September that the company planned to spin off its chip manufacturing business as a subsidiary and was open to external investors in the unit. In a filing to securities regulators on Wednesday, Intel said that if its foundry was spun off as a new private holding company, Intel would have to hold at least 50.1 per cent of the division. If the foundry became a publicly listed company and Intel was not the largest shareholder, the company could only sell up to 35 per cent of the foundry to any single shareholder, otherwise it would violate the change of control provisions. A spokesperson for the Commerce Department said the government was negotiating the change of control provisions with all recipients of the grants. The filing said that Intel needed to comply with the restrictions in order to continue its $90bn projects in Arizona, New Mexico, Ohio and Oregon and continue to produce advanced chips in the US. It said that any change of control could require Intel to seek permission from the Commerce Department.