August 26th news (editor ÏÄÜŠÐÛ)On Monday (25 August), U.S. chip company Intel issued a warning that 10% of the company¡¯s shares held by the Trump administration could pose a risk to its business and that the government¡¯s stake could even rise to 15% if the chip manufacturing business fails to reach certain thresholds.

The picture shows a screenshot of Intel's press release

In a filing with the U.S. Securities and Exchange Commission, Intel pointed out that the agreement announced by U.S. President Trump on Friday makes the federal government the company's largest shareholder, which could affect its international sales, which account for 76% of its revenue.

Intel also said the agreement could trigger lawsuits and be opposed by foreign governments, business partners and even its own employees.

On August 22, the U.S. government reached an agreement with Intel to acquire Intel¡¯s 9.9% stake for approximately $8.9 billion, becoming one of its largest shareholders.

The U.S. government has become one of Intel¡¯s largest shareholders.

According to Intel, if the company holds a share of less than 51% in its ¡°Circle Operations¡± (i.e. chip manufacturing plants), the government has the right to purchase an additional 5% share at a price of $20 per share over the next five years, which is about to continue to rise from 10% to 15%.

Intel is one of the few companies with both chip design and manufacturing businesses, but its chip foundry business has continued to suffer losses in recent years, dragging down the company's operating conditions. Previously, Intel has tried to find solutions for its struggling chip foundry business, including options such as spin-off and sale.

It should be noted that in such notices, the list of risks is usually a formal enumeration, and not all risks will occur. However, Intel noted that government holdings are uncharted territory and that the company could face unusual risks.

¡°Given the few precedents in recent years where the U.S. government has become a major shareholder of a similar company, it is difficult to foresee all the potential consequences.¡±

It is that Intel will issue shares directly to the U.S. Department of Commerce at a discounted price of $20.74 per share, which will dilute the existing shareholder value, with the transaction to be delivered on Tuesday or ¡°finished as soon as possible thereafter.¡±

It is worth mentioning that earlier this month, the Japanese Softbank Group announced an investment of $2 billion in Intel at a price of $23 per share.

As of Monday¡¯s closing, Intel¡¯s share price was $24.55 per share. Since the beginning of last year, Intel¡¯s share price has dropped by about half to a current market value of about $10.75 billion.

Extended reading

Intel is just the beginning! Trump: Will hold more corporate shares

On Monday local time, US President Donald Trump boasted about the government's investment in Intel on the social platform Truth Social and said he was determined to make more similar deals, that is, to take more shares in private companies.

Trump tweeted: ¡°I didn¡¯t pay a penny for Intel¡¯s stock transaction, it¡¯s worth about $11 billion, and all the profits go to the United States.¡±

The picture shows a screenshot of Trump's post

¡°I will continue to make similar deals for our country, and those fools who are dissatisfied with this initiative don¡¯t realize that it will bring more money and jobs to the United States.¡±

¡°I will also help companies that make such profitable deals with the U.S. ... I like to see their stock prices rise and make the U.S. richer and richer.

Earlier in the day, White House economic adviser Kevin Hassett said the Intel deal was part of a broader strategy to create a sovereign wealth fund that could include more companies.

In a landmark move to further expand federal intervention in private companies, the White House announced on Friday that it would take a 10 percent stake in the chip-making giant Intel. The stake, worth about $8.90 billion, will come partly from grants related to the Chip Act and partly from separate government grants for projects to make secure chips.

In addition, the U.S. government has also obtained a license that allows the government to purchase an additional 5% of Intel shares if Intel is no longer a holding shareholder in its Xerox business in the future.

Establish a sovereign wealth fund

Although Hassett emphasized that the government would not interfere in company operations, he said the move was part of an ongoing strategy.

Hassett said: ¡°I think it¡¯s a very, very special situation because there¡¯s a lot of Chip Act subsidies coming in.¡± he added: ¡°But the president made it clear during the campaign that he hoped the United States would eventually start building a sovereign wealth fund.

It is that Trump signed an executive order earlier in February to launch the establishment of sovereign wealth funds. Such funds are typically invested by small, resource-rich countries to leverage natural resource revenues. According to data from the Sovereign Wealth Fund Research Institute, Norway is the global leader in such funds, with assets of about $1.8 trillion, with similar large funds in several countries in the Middle East.

Mr. Hassett said that while it was unusual for the US government to hold large stakes in private companies, it was not unprecedented, pointing to the stakes in Fannie Mae and Freddie Mac after the financial crisis. "We're definitely not picking winners and losers, but it's not unprecedented."

He added that the move is also part of the government¡¯s strategy, which also includes encouraging more companies to move production back to the U.S. by imposing tariffs.

Gautam Mukunda, a lecturer in innovation and leadership at the Yale School of Management, pointed out that this was a forced intervention by the government and an unprecedented intervention in a company that was not in a critical situation. Intel's current situation is different from that of the banking industry during the 2008 financial crisis.