Intel warns of risks of deal with Trump administration
Intel said a deal with the Trump administration, which would see it give the U.S. Commerce Department a 10% stake, could pose significant risks to investors, employees and international sales, in a filing with the U.S. Securities and Exchange Commission (SEC), CNBC reported.
The key issue is that 76% of the company’s revenue in 2024 came from outside the U.S. Intel’s revenue last year was $53.1 billion, down 2% from the year before. The company is now directly associated with Trump’s ever-changing policies on tariffs and international trade. This could cause negative reactions from foreign customers and partners.
Intel warned in the report that the deal could trigger both immediate and long-term negative consequences from investors, employees, suppliers, competitors and even foreign governments. There are also potential lawsuits and increased political attention for the company. In addition, changing political conditions in Washington could jeopardize the deal itself.
Under the deal, the government will receive up to 433.3 million Intel shares, diluting the stakes of current shareholders. The acquisition is being financed with funds allocated under the CHIPS Act . In total, the company received $11.1 billion from federal programs.
Despite the risks, Intel shares rose 25% in August on expectations of a deal that Trump called a "great achievement for America," stressing the importance of producing cutting-edge chips.
However, Intel noted that the government's stake gives the state voting rights along with the board of directors, which reduces the influence of private shareholders and may limit deals that are beneficial to them.
Recall that the state participation in Intel's capital demonstrates how Trump's attitude towards the company has changed. Just a few weeks ago, the president called for the resignation of the management due to suspicions of ties to China. However, after meeting with current CEO Lip-Bu Tan, his rhetoric changed to a more favorable one.