Intel's hype machine appears poised to rev into high gear again, this time courtesy of a significant investment by none other than the Japanese giant SoftBank.
To wit, SoftBank has just announced its intention to purchase up to $2 billion worth of Intel common shares. With the deal pricing each share at $23, SoftBank's investment in Intel is likely to amount to 86.956 million shares, making it one of the top ten shareholders. For reference, the stock closed today's regular trading session at $23.66.
The move, which will see Intel issue new shares, is part of SoftBank's commitment to gain exposure to the expanding semiconductor fabrication footprint in the US, and reflects the Japanese conglomerate's belief that the chipmaker would play a "critical role" in this endeavor:
" This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role."
Meanwhile, the initial effervescence around a potential US government stake in Intel is rapidly deflating.
As we reported earlier today, the Trump administration is mulling the purchase of a 10 percent stake in Intel to jump-start its much-delayed Ohio fab. However, in a development that seriously curtails the windfall that would accrue to the struggling chipmaker, the administration is considering the conversion of CHIPS Act funding that Intel has already received into equity.
Do note that Intel has been awarded grants worth $7.9 billion, along with a facility that unlocks an additional $11 billion worth of loans, as part of the CHIPS Act initiative to re-shore semiconductor supply chain. It is also entitled to receive $3 billion under the Pentagon's Secure Enclave program.
Intel's market cap is currently hovering around $103 billion. As such, a 10 percent stake would be worth around $10 billion. This means that the Trump administration might invest an additional $2.1 billion in the semiconductor company to acquire a 10 percent stake, provided that the entirety of the CHIPS Act grants are converted into equity.
Intel shares are up 5 percent in after-hours trading today. Over the past 5 trading days, the stock's gains are now approaching 20 percent.
Update:
As per the reporting by Financial Times, SoftBank has also raised the subject of buying out Intel's contract chipmaking business. While the Japanese conglomerate seems to have settled for a minority stake in Intel for now, it does not preclude a deeper involvement in Intel's contract chipmaking business at a later stage.
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