In what appears to be evolving into an industry-wide phenomenon, the Trump administration is now reportedly looking into acquiring a stake not just in Intel but also in a number of semiconductor companies that are setting up a sizable manufacturing footprint in the US, including Micron, Samsung, and TSMC.
As we've been noting over the past few days as each iterative development unfurls, the Trump administration is reportedly looking to acquire a 10 percent stake in Intel. To do so, the administration is purportedly planning to convert into equity the $7.9 billion in grants that the struggling semiconductor company received under the CHIPS Act fund as an inducement to re-shore chip fabrication in the US. Of course, $7.9 billion is not sufficient to acquire a 10 percent stake in Intel, which necessitates some sort of ancillary federal funding.
Nonetheless, it seems that the administration intends to accord the same treatment now to the CHIPS Act grants earmarked for Micron, Samsung, and TSMC, as per the reporting by Reuters.
Even though $33.7 billion in funding under the CHIPS Act has already been earmarked for various companies via binding awards, actual cash disbursements to date have been minimal at best. This gives the Trump administration some much-needed flexibility in negotiating the proposed grants-to-equity conversion with Intel, Micron, Samsung, and TSMC.
For the benefit of those who might not be aware, $6.6 billion in grants have been earmarked for TSMC under the CHIPS Act, followed by $6.2 billion for Micron, and $4.75 billion for Samsung.
Of course, with the Trump administration seemingly intent on divvying up the US government patronage among the who's who of the chip fabrication world, much of the unique advantages that were previously expected to accrue to Intel alone now stand negated. Hence, the moderate weakness in the stock in today's after-hours trading session.
Update:
It looks like the US government is leaning away from taking an equity stake in Semiconductor giants such as TSMC and Micron, and would instead focus its equity-taking efforts on smaller players.
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