The chief financial officer for the chip manufacturer Intel, David Zinsner, has announced his company received $5.7bn as part of a deal negotiated with the administration of United States President Donald Trump.
During an investor conference on Thursday, Zinsner said that Intel, a leader in the US development of semiconductor chips, received the funds on Wednesday evening.
Last week, the White House revealed the federal government would take a 10 percent stake in the struggling tech giant, based in Santa Clara, California.
As part of the deal, the government negotiated a five-year warrant for an additional 5 percent of Intel’s shares, in case the company should cease to own more than 51 percent of its manufacturing operations.
“I don’t think there’s a high likelihood that we would take our stake below 50 percent,” Zinsner said. “So ultimately, I would expect [the warrant] to expire worthless.”
The Trump administration converted funds earmarked for Intel under the 2022 CHIPS Act — signed into law by former President Joe Biden — into capital to buy the US government’s stake.
In a news briefing on Thursday, however, White House press secretary Karoline Leavitt indicated the deal with Intel was still being negotiated.
“The Intel deal is still being ironed out by the Department of Commerce. The Ts are still being crossed, the I’s are still being dotted,” Leavitt said. “It’s very much still under discussion.”
Many of the enduring questions hinge upon Intel’s chip manufacturing arm, or foundry.
Trump campaigned for re-election on the promise that he would restore the US’s domestic manufacturing industry and outcompete economic rivals like China in the technology sector.
But Intel has taken steps to separate its foundry from its design business, and it indicated it may be open to outside investment in the foundry.
The company has also created a separate management board to govern its manufacturing branch.
Should Intel take outside funding for the foundry business, Zinsner said the company was leaning toward taking a strategic investor versus a financial one. But Intel is “years away from that”, he said.
In July, Intel disclosed that the future of its foundry business depended on securing a big customer for its next-generation manufacturing process known as 14A. Failing that, it could get out of the foundry business altogether.
Still, on Thursday, Zinsner downplayed the potential risk to its foundry. “The lawyers are always looking for areas where we should be elaborating in terms of our risks,” he said.
The investment comes as Intel faces increased pressure from competitors like NVIDIA, which reported better-than-expected quarterly earnings on Wednesday.
Dan Ives, an analyst at Wedbush Securities, told Al Jazeera that NVIDIA is at the top of the chip industry, as demand for its artificial intelligence (AI) technology grows.
“With AI infrastructure investments continuing to grow [and] with the company expecting between $3 trillion to $4 trillion in total AI infrastructure spend by the end of the decade, the chip landscape remains NVIDIA’s world,” Ives said.
“Everybody else,” he added, is “paying rent as more sovereigns and enterprises wait in line for the most advanced chips in the world.”
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