Intel Corporation, the largest American manufacturer of computer chips, enjoyed soaring share prices. This boom came on the heels of a $9.5 billion investment agreement with Softbank Group Corp., one of Japan’s technology investment titans. Softbank has agreed to buy a $2 billion stake in Intel, which is about £1.5 billion. Along with a significant private capital investment from Intel, this public investment will further strengthen Intel’s financial position and continuing technological leadership.
Softbank will then need to buy up all of the outstanding shares for $23 a piece. This is a smart play, as it increases its footprint in the growing semiconductor space. In a joint statement, both companies expressed enthusiasm about the partnership, stating that “the investment comes as both Intel and SoftBank deepen their commitment to investing in advanced technology and semiconductor innovation in the United States.”
The news of this agreement comes during continued White House criticism towards the US chip industry. That’s according to Intel’s own CEO, Lip-Bu Tan, who was recently summoned to meet with former President Donald Trump—before Trump publicly demanded Tan’s resignation. Trump called him “highly conflicted”—because of his past business relationships with China.
As part of its broader strategy, the Trump administration is in discussions to acquire a stake of around 10% in Intel by converting government grants into shares. This action bolsters the booming domestic chip-making industry. Meanwhile, Intel is moving full speed ahead on its $20 billion plans to construct a flagship manufacturing hub in Ohio.
The US semiconductor industry is under the most scrutiny that they’ve faced in ages, especially about what they do in China. Now competing companies Nvidia and AMD are falling in line with government expectations. They’ve already committed to pay 15% of their Chinese revenues to the US Treasury in order to obtain critical export licenses.
Given these new circumstances, the White House has underscored the need to secure a strong domestic technology sector. Yet, as one spokesman warned, much of the information about likely future government investments “needs to be treated as speculation.”