Chip designer Intel's shares were up 2% today after CFO David Zinsner outlined at Citi's 2025 Global Technology, Media And Telecommunications Conference that the firm was on track to close its Altera divestment. At the event, Zinsner shared details about the US government's historic 10% stake in Intel, as he outlined that it was a great deal for the taxpayer and the American people.
Intel CFO Says Firm Will Use US Equity Funds To Clear Out Its Debt Due By 2025 End
Early in his chat with Citi's Christopher Danely, Zinsner outlined that before the US government took a stake in the firm, Intel had "roughly 5.7 billion dollars of grants still to go. Along with $2.2 billion we had already gotten." However, all this money "was in an uncertain situation" at that point, and Intel wasn't sure that it would "get any of the remaining $5.7 billion," he said.
Zinsner added that even the $2.2 billion that Intel had received under government funding had clawback rights, with the future of the firm's $3 billion of the CHIPS Act Secure Enclave funding also being uncertain. According to him, US investment eliminated the uncertainty and exchanged it for an equity stake, and to further sweeten the deal, Intel got the money upfront except for the $3 billion, which will be paid over a couple of years.
As for worries about the government interfering in Intel's affairs, he asserted that the government will vote in line with the board recommendations. Further commenting on the funding, Zinsner added that the firm's Altera divestment will close over the next few weeks to provide an additional $3.5 billion. Softbank's investment should also come by the end of the quarter after the investment firm completes its regulatory requirements.
Intel will use the money to pay $3.8 billion in debt it had maturing this year, and its "intention is that all of that will mature and we will not refinance any of it," Zinsner said.
Danely then asked him whether Intel had spun off its Foundry business into a subsidiary to create flexibility for external customer investment. "It's not inconceivable that we do that, I think, the likelihood is that it won't happen anytime soon because it's not quite investable yet," he said in response.
However, Zinsner believes that "at some point, down the road I could see that happening." However, due to the government's warrants, even if Intel does sell a stake in the Foundry business, less than 49% of the business will be sold off, he added.
Zinsner admitted that Intel "spent money ahead of demand over the last few years and that has not served us well," but on a positive note, commented that CEO Lip-Bu Tan was becoming more confident with the firm's next generation 14A process. While admitting that the possibility of not getting a customer with the process and subsequently not building capacity exists, there is "relatively low likelihood it goes that way," according to the Intel CFO.
Intel's next generation process will also be more expensive than 18A as Zinsner outlined:
"In addition, 14A is more expensive than 18A. You know it's not significantly, in terms of investment, so it is a higher cost wafer for sure. And partly that's because we are expecting to use High NA EUV tools in 14A which was not in case in 18A."
Apart from using the High NA tools, additional lithography steps due 14A's complexity are a cost driver, he added.
Over the past couple of years, Intel has started using TSMC's foundries for some product components. Intel's dependence on TSMC will "vacillate" depending on how the Foundry business performs and also due to which products the firm is producing
However, Intel "will be putting products on TSMC, you know, forever really. You know they're a great partner for us," he admitted as TSMC's technology and support are noteworthy. As a result, Intel continues to intend to use them, as it currently does with its Lunar and Arrow Lake products. When further pressed for the specifics, he shared that 30% of Intel's products come from TSMC, and while the percentage will drop, it will still be higher compared to the firm's position a decade back.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
Follow Wccftech on Google to get more of our news coverage in your feeds.
