By Stephen Nellis
(Reuters) – Intel said on Wednesday that its deal for $7.86 billion in U.S. government subsidies restricts the company’s ability to sell stakes 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 revitalize U.S. chip manufacturing.
Intel Chief Executive Pat Gelsinger said in September that the company planned to spin off its chipmaking operations into a subsidiary and was open to accepting outside investors in the unit, called Intel Foundry.
In a regulatory filing, Intel said Wednesday that the subsidies require it to own at least 50.1% of Intel Foundry if the unit is spun off into a new private legal entity. If Intel Foundry becomes a public company and Intel itself is not the largest shareholder, the company could sell only 35% of Intel Foundry to a single shareholder before encountering change of control provisions.
Intel did not immediately respond to a request for comment on the disclosures. A Commerce Department spokesperson said the government is negotiating change-of-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 manufacturing cutting-edge chips in the United States, according to the document. Any change in control could require Intel to request permission from the US Department of Commerce, according to the document.
(Reporting by Stephen Nellis in San Francisco; Editing by Cynthia Osterman)