US authorities deprived Intel of the opportunity to sell its chip production

It would seem that the recent decision by the American authorities to allocate $7.86 billion in subsidies to Intel under the Chip Act should be considered good news for the company, but receiving this money imposes additional obligations on the chip manufacturer. Intel will have to maintain capital control of the manufacturing division even if it becomes a standalone company.

Image Source: Intel

The restrictions, described in white papers cited by Reuters, would force Intel to retain at least a 50.1% stake in its contracting unit, Intel Foundry, if it were to be spun off but remain a private company. If Intel decides to take this division to an IPO and become not its largest shareholder, none of the other shareholders should own more than 35% of the shares of this company. In any case, all transactions for the sale of Intel Foundry shares will have to be approved by the parent company with the US Department of Commerce.

Let us remind you that other requirements are imposed on recipients of subsidies under the 2022 “CHIP Act” in the United States. They will have to limit the volume of investments in their enterprises in China for several years, although this condition is not entirely relevant for Intel after the sale of a solid-state memory plant in Dalian, China. In addition, the US authorities are ready to oblige the most successful recipients of subsidies to share “excess profits” with the American budget and not get carried away with returning capital to shareholders through the payment of dividends and the repurchase of their own shares.