DI25004 Semiconductors - Intel V01 200825

 SoftBank backs Intel as Trump eyes stake

Martin Strydom - Business News Editor, Louisa Clarence-Smith - US Business Editor

The Japanese technology investor Soft- Bank is taking a $2 billion stake in Intel in a vote of confidence in attempts to turn around the struggling American chipmaker.

The investment follows reports that Intel is in talks with the Trump administration about the US government taking a stake as well.

SoftBank is paying $23 a share for the stake of just under 2 percent, making it the company’s sixth-largest investor — a slight discount to Intel’s $24.92-ashare closing price on Monday night.

Masayoshi Son, chairman and chief executive of SoftBank, said: “Semiconductors are the foundation of every industry. For more than 50 years, Intel has been a trusted leader in innovation. This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.”

Lip-Bu Tan, the Intel chief executive, who is looking to restore the fortunes of the former leading chipmaker, was once on the board of SoftBank. So far this year, SoftBank has invested $30 billion in the ChatGPT maker OpenAI and led the financing for Stargate, a $500 billion data centre project in the US.

Intel, founded in 1968, was one of the businesses to put the silicon into Silicon Valley, designing and manufacturing microchips for the burgeoning computer industry. Its dynamic random-access memory chip, released in 1970, was the first to store a significant amount of information.

However, it has struggled to compete after missing out on the boom in artificial intelligence chips. Intel shares have fallen more than 50 per cent in the past five years, overtaken by the AI chipmaker Nvidia, now America’s most valuable public company.

On Friday, reports that the Trump administration was in talks about taking a stake in Intel lifted shares in the company. The move could accelerate Intel’s plans to build the world’s largest chipmaking plant in Ohio.

The discussion about a stake is seen as the latest sign of the White House taking a transactional approach to dealing with companies to encourage investment. It follows an agreement with Nvidia and AMD last week for a 15 per cent cut from sales to China, in exchange for issuing export licences.

Trump has been pushing companies to bring more manufacturing back to the US from abroad. Apple pledged an additional $100 billion in US investment this month, bringing its total domestic commitment to $600 billion over four years, in return for tariff exemptions.

The plan to take a stake in Intel is said to stem from a meeting last week between President Trump and Tan, days after Trump publicly called for Tan’s resignation over his investments in Chinese tech companies.

Bloomberg, which first reported the discussions about the US government taking a stake, reported yesterday that the Trump administration was looking to convert some of the company’s Chips and Science Act grants into a 10 per cent equity stake in the company.

Scott Bessent, the US Treasury secretary, said any US investment in Intel would be to help the group stabilise, but the government would not force US companies to buy Intel chips.

“The last thing we’re going to do is take a stake and then try to drum up business. The stake would be a conversion of the grants and maybe increase the investment into Intel to help stabilise the company for chip production here in the US,” Bessent said, referring to grants allocated under the Chips and Science Act.

Bessent did not provide details about the size or timing of any US stake.

The US has fallen from about 37 per cent of global chip production in 1990 to less than 12 per cent today. The Chips and Science Act, signed in August 2022, authorised about $280 billion in new funding to support domestic research and manufacturing of semiconductors in the US.

SoftBank’s funding comes as Tokyo pledged a $550 billion investment package into the US last month as part of a trade deal with Washington. The Intel investment is not currently part of that package, it is understood.

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