Trump Administration Blocks Intel Foundry Sale with Strategic Deal

The Trump administration has structured a deal to prevent Intel Corporation from selling its foundry unit, securing a 10% stake in the company. This move is designed to deter Intel from spinning off its foundry business, which has been underperforming financially. The deal includes a five-year warrant allowing the U.S. government to acquire an additional 5% of Intel if the company reduces its stake in the foundry unit below 51%, according to the Financial Times.

Intel's CFO, David Zinsner, revealed that the company received $5.7 billion in cash as part of the agreement, which is part of the U.S. CHIPS and Science Act grants. The deal aims to keep Intel's foundry business, which reported a $3.1 billion operating loss in the second quarter, under the company's control despite calls from analysts and investors to sell the struggling unit.

The agreement reflects the administration's intent to bolster domestic chip manufacturing, as many industry players rely on offshore manufacturing by companies like TSMC. Intel's foundry unit, which provides custom chips for external clients, has faced challenges in attracting major customers like Nvidia and Apple, who remain unconvinced of Intel's manufacturing reliability.