By Stephen Nellis
(Reuters) – Intel said on Wednesday its agreement for $7.86 billion in U.S. government subsidies limits the company’s ability to sell shares in its chipmaking unit if it becomes an independent entity.
The U.S. Commerce Department on Tuesday announced the subsidy to Intel, part of $39 billion for the sector including Taiwan Semiconductor Manufacturing Co and others, in an effort to revive chip manufacturing in the United States.
Intel Chief Executive Pat Gelsinger said in September that the company planned to spin its chipmaking operations into a subsidiary and was open to bringing outside investors into the unit, called Intel Foundry.
In a securities filing Wednesday, Intel said the grants require it to own at least 50.1% of Intel Foundry if the unit is split into a new private legal entity. If Intel Foundry becomes a publicly traded company and Intel itself is not the largest shareholder, the company would only be able to sell 35% of Intel Foundry to a single shareholder before entering change-of-control provisions.
Intel did not immediately respond to a request for comment on the revelations. A Commerce Department spokesperson said the government is negotiating change-in-control provisions with all direct grant recipients.
Intel would have to comply with the restrictions to continue the company’s $90 billion projects in Arizona, New Mexico, Ohio and Oregon and continue producing cutting-edge chips in the U.S., the filing said. Any changes in control would require Intel to seek approval from the U.S. Department of Commerce, the filing said.
(Reporting by Stephen Nellis in San Francisco; Editing by Cynthia Osterman)
