U.S. government takes 10% stake in Intel

I’d really rather we didn’t bail out these companies at all. It clearly creates moral hazard and makes it hard for better run companies to enter markets.

The government took 79.9% of AIG in that bailout - which was the biggest of the "too big to fail" bailouts from the past. People seem to forget that the owners of these companies that were bailed out got almost completely wiped out and instead focus on management compensation (which famously stayed high).

If a company has truly become too big to fail that it makes sense for the federal government to bail them out, then why are we even leaving the welfare of the company up to private industry in the first place? It's just asking for ways to siphon taxpayer money out of the government through their willingness to buy shares. It inflates the stock price because it shows that the government might buy more share in the future at market rate. Its operations should be required to be more transparency, since if they're large enough that their failure would dramatically impact the welfare of the whole country, their operations should be subject to more direct democratic will (at least, more direct than the many steps removed from what is happening to Intel).

It's not otherwise related to all this but a real bug bear of mine is that municipalities don't get part ownership - along with controlling rights for matters like sales or relocations - of sports teams when we subsidize their stadiums through taxes.

I think it's a good choice for Intel as they are one of the very few who own fabs and fabs are extremely valuable pieces of equipment. Just because of 3 consecutive annual CPU "bugs" in essence, they should not shut down forever. Try try again.

They're converting a grant, so Intel is worse off due to this move.

The only real benefit I can see is it looks more revenue neutral because the government getting something of value and Trump is unpopular for spending so much money on unfunded tax cuts.

The government should avoid bailing out big, uncompetitive corporations. If the government is acting as lender-of-last-resort in some crisis, then it should demand senior debt to that it gets paid back before any shareholder.

Government is starting to be to big to fail. Living in the Great Lakes region its just the reality of it, as the geopolitics of the region are outplayed by idiots in other parts of the state.

There is only 1 winner and 1 loser: Intel.

It's the only chip manufacturer "left" in the US. The argument is national security: the US expects China to invade Taiwan and this will kill TSMC in the process.

Whether this will happen or not can be debated, but this is what the government expects.

The only charitable answer I could give is national security reasons for having domestic chip production, and even that could be accomplished in ways that don’t require the federal government having an ownership stake in Intel. For example, I don’t think the federal government has ownership stakes in Lockheed Martin and Northrop Grumman, despite those companies’ dependence on the military.

I don't expect a good reason given the history of this Administration, but a reason in my mind to save Intel is there's only 3 license holders for x86 CPUs. Intel, AMD (American), and VIA (Taiwanese). A dead Intel leaves a single American company that is able to make x86 processors, and a monopoly for actually good x86 CPUs. But somehow I suspect there's no logical reason for this besides lining the pockets of those in the Administration.

You are asking why save Intel of all chip manufacturers, and the answer is because there aren't any other major chip manufacturers in the US.

AMD no longer has a fab. TSMC dominates the global market and basically has no competition.

In the event that Taiwan is invaded, the US would suddenly have a huge problem getting access to any kind of high end chips, be they CPUs or GPUs. This would be a major problem economically and militarily for the US.

Some caveats: Due to the chip act, TSMC does now have fabs Arizona, though I'm not sure what their capacity is. TI, and some others building lower end components also have fabs I believe. For x86, high end ARM, and GPU's, virtually all of that is manufactured by TSMC right now, mostly in Taiwan.

This is a sure giveaway that the US military depends on Intel. It is the only major chip producer that has fabs in the US, and it is also the creator of the x86 architecture. That would mean that without Intel the military would become dependent on chips from Chinese Taiwan.

They are the only US company that can produce cutting edge chips now and realistically within the next 15+ years. It doesn’t matter that TSMC produces chips in the US. That is nice for the short term but doesn’t do much for the US in the long term if TSMC falls under China’s influence.

Intel is in the midst of a dramatic turnaround and huge shift in strategy. It might fail. But if they succeed it puts Intel and the US in a much stronger position in terms of technology and military leadership.

This isn't a generalizable problem. There just aren't many companies that would be in a comparable situation to Intel.

Intel is:

* Critical to national security

* An advanced, industry that's extremely hard to spin up

* Essentially, one of two companies in it's industry.

Very few other companies meet all of those criteria.

They supply components for the defense industry, where foreign production isn't a viable option. No one bank is more important than that. This is also why Micron is getting a free fab for strategic redundancy despite no clear reason why they would need 2x capacity after onshoring back to Boise.

Because this clears the way to sell Intel Foundry and separate the chip design from the chip-manufacturing businesses completely.

The CHiPs act money had claw-backs such that if Intel sold the Foundry off they had to pay the government all the money back. This new deal waives all the clawbacks and says instead the Government gets warrants, good for five years, for 5% of the company at $20/share, good once they control less than 51% of the Foundry.

Ergo, the reason for the deal is that the board wants to sell off the Foundry, and didn't want to pay back the CHiPS act money.

Just another Trump shakedown. Nothing to see here.

A deal for 15 percent of revenues of specific AMD and NVidia part sales in China != 15 percent of all their revenues, not even close.

Rare earth miner MP Materials back on July 10. Next feels like TikTok or Fox News.

So no shareholder vote required?

It is equivalent to a 10% dilution (shares issued for no extra cash).

The Supreme Court’s standing doctrine is also weird. If the board of directors approves it, then would the shareholders even be able to sue?