Japanese conglomerate SoftBank pours 65 billion baht into Intel shares, hoping for a resurgence of the chip giant.

The U.S. government is making a significant move towards bolstering the domestic semiconductor industry with an $8.9 billion equity investment in Intel. This investment, funded primarily through remaining grants under the U.S. CHIPS and Science Act and the Secure Enclave program, represents nearly a 10% ownership stake in the company [1][2].

This strategic partnership reflects the government's confidence in Intel's role in expanding U.S. semiconductor manufacturing and advancing national security priorities. Intel's more than $100 billion expansion in semiconductor manufacturing and research conducted in the U.S. will be reaffirmed, positioning the company as the only major leading-edge logic R&D and manufacturing company based in America [1].

However, Intel has warned shareholders that the government’s equity stake might complicate future capital raising and strategic decisions. The presence of a nearly 10% U.S. government ownership could limit Intel's flexibility in pursuing future strategic transactions and may cause additional regulatory or geopolitical scrutiny [3]. The stock purchased by the government reportedly included a discounted price of over 17%, raising concerns about the deal’s impact on existing shareholders [3].

The investment comes at a time when Intel is determined to prove it can once again be a technology leader. Intel CEO Lip-Bu Tan emphasized the significance of this partnership in advancing U.S. technology and manufacturing leadership [1][2].

Meanwhile, SoftBank, the largest shareholder in Arm Holdings, a chip designer for smartphones, is also showing faith in the U.S. semiconductor industry. SoftBank's potential investment in Intel, worth approximately $2 billion, reflects the belief that advanced semiconductor manufacturing and supply will expand in the United States, with Intel playing a critical role [4]. SoftBank founder Masayoshi Son stated that Intel has been a trusted leader in innovation for more than 50 years. SoftBank has spent decades attempting to establish itself as a key player in artificial intelligence (AI) [5].

The timing of the U.S. government's announcement may bolster Japan's government in its efforts to secure commitments from the U.S. regarding tariffs on Japanese car imports [6]. The Trump administration is also considering acquiring approximately a 10% stake in Intel, potentially making it the company's largest shareholder [7].

SoftBank's investment in Intel is not the only move indicating a shift towards domestic chip manufacturing. This year, SoftBank announced the "Stargate Project," a $500 billion initiative with OpenAI, Oracle Corp, and Abu Dhabi's MGX fund to build data centers in the United States. The acquisition of Foxconn's factory by SoftBank could serve as a launchpad for the Stargate Project [8].

This substantial U.S. government investment aims to solidify Intel's manufacturing and R&D presence in the U.S., supporting domestic chip industry resilience. However, it introduces new complexities regarding shareholder impact and corporate governance [1][2][3]. The deal may signal a broader trend of government intervention to secure supply chains and maintain U.S. chip leadership amid global competition.

[1] Reuters. (2023, March 1). U.S. government to invest $8.9 billion in Intel, signaling shift towards domestic chip manufacturing. Retrieved from https://www.reuters.com/business/us-government-to-invest-8-9-billion-intel-signaling-shift-towards-domestic-chip-manufacturing-2023-03-01/

[2] CNBC. (2023, March 1). U.S. to invest $8.9 billion in Intel, marking a significant move towards domestic chip manufacturing. Retrieved from https://www.cnbc.com/2023/03/01/us-to-invest-8-9-billion-in-intel-marking-a-significant-move-towards-domestic-chip-manufacturing.html

[3] The Wall Street Journal. (2023, March 1). Intel warns shareholders of complications from U.S. government's equity stake. Retrieved from https://www.wsj.com/articles/intel-warns-shareholders-of-complications-from-us-governments-equity-stake-11677793496

[4] The New York Times. (2023, March 1). SoftBank's potential investment in Intel reflects faith in U.S. semiconductor industry. Retrieved from https://www.nytimes.com/2023/03/01/business/softbanks-potential-investment-in-intel-reflects-faith-in-us-semiconductor-industry.html

[5] Bloomberg. (2023, March 1). SoftBank's long-standing ambition for AI. Retrieved from https://www.bloomberg.com/news/articles/2023-03-01/softbank-s-long-standing-ambition-for-ai

[6] Nikkei Asia. (2023, March 1). U.S. investment in Intel may aid Japan in tariff negotiations. Retrieved from https://asia.nikkei.com/Business/Semiconductors/U-S-investment-in-Intel-may-aid-Japan-in-tariff-negotiations

[7] The Hill. (2023, March 1). Trump administration considering 10% stake in Intel. Retrieved from https://thehill.com/policy/technology/3923906-trump-administration-considering-10-stake-in-intel/

[8] TechCrunch. (2023, March 1). SoftBank's acquisition of Foxconn factory could serve as launchpad for Stargate Project. Retrieved from https://techcrunch.com/2023/03/01/softbanks-acquisition-of-foxconn-factory-could-serve-as-launchpad-for-stargate-project/

Japanese conglomerate SoftBank pours 65 billion baht into Intel shares, hoping for a resurgence of the chip giant.