Besides $7.86 Billion Subsidy, Biden Administration Also Tightens Grip on Intel
1min read Intel has reached a subsidy agreement of $7.86 billion with the U.S. government, but the company has revealed that the agreement comes with very complex conditions.
On Wednesday, Intel stated that the U.S. government requires Intel not to arbitrarily sell shares of its chip manufacturing division while receiving chip subsidies. According to documents provided by Intel, if Intel's chip foundry is split into a new private company, the subsidy stipulates that Intel must hold at least 50.1% of the shares in the new company; if Intel's foundry becomes a publicly listed company and Intel is not the largest shareholder, then the new company can only sell up to 35% of its shares to any single shareholder.
The documents also state that any change in control of Intel may require permission from the U.S. Department of Commerce. Only by meeting these conditions can Intel receive funding from the U.S. government to continue its $90 billion chip factory project in Arizona, New Mexico, Ohio, and Oregon.
In September, Intel CEO Pat Gelsinger expressed the idea of splitting the chip manufacturing business into a subsidiary and accepting external investment in the division.
Subsequently, market rumors suggested that Qualcomm hoped to acquire Intel to strengthen its own business lines, but this plan seems to be close to failure due to political factors and antitrust concerns.
Intel did not comment on the condition of restricting the sale of the division, and the U.S. Department of Commerce, which leads the distribution of chip subsidies, stated that the Biden administration is negotiating control change terms with all subsidy recipients.
This seems to mean that the Biden administration has further tightened the subsidy conditions for Intel, not only reducing the originally promised subsidy scale but also showing signs of government intervention in corporate business decisions.
Previously, the Biden administration planned to provide Intel with up to $8.5 billion in subsidies.
This may also be related to Intel's financial difficulties, which have not seen improvement for a long time. The company recently reported the largest quarterly loss in its 56-year history, which is a blow to the Biden administration's ambition to revitalize the U.S. chip manufacturing industry, as Intel has always been the most valued American blood in the plan.