After Intel Corp. agreed to the U.S. government taking an $8.9 billion equity stake in the company in exchange for the funding from the CHIPS and Science Act. The Trump Administration suggested it might look to similar deals with other companies that received funding from the Biden Administration’s key piece of semiconductor legislation.
But the companies may not be willing to play ball.
According to reports, vendors who did received or are scheduled to receive CHIPS Act funding would rather relinquish those grants than be made to follow Intel in giving equity to the U.S. government in return.
Leading chipmaker and pure-play foundry Taiwan Semiconductor Manufacturing Co. (TSMC) said it would give up its $6.6 billion subsidy if the government insisted on such a plan.
American foundry GlobalFoundries said at a recent Deutsche Bank Technology Conference that the CHIPS Act’s framework does not involve any equity. GF said that instead the framework included expanding capacity across its fabrication plants along with its own increased investment plans of $16 billion across the next decade.
GlobalFoundries received about $1.5 billion in grants from the CHIPS Act.
Other companies that have received funding from the CHIPS Act include:
- Samsung Electronics - $4.7 billion
- Micron Technology - $6.165 billion
- Texas Instruments - $1.61 billion
- Microchip - $162 million
- Polar Semiconductor - $120 million
- Entegris - $75 million
- Rocket Lab - $23 million
- GlobalWafers - $400 million
- Amkor Technology - $400 million
Changing policies
While common in other parts of the world, direct equity investment from the government in private companies is rare in the U.S. While typically the government has played a role in policy decisions and subsidies, direct equity investment is not typically a prerequisite.
The deal with Intel for about a 10% stake in the company and the unprecedented deal with Nvidia and AMD to give the U.S. government 15% in revenue from Chinese sales for advanced chips show a growing change in how the government is taking a more direct hand in business, particularly technology.
Intel deal
The equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel through the CHIPS Act as well as the $3.2 billion awarded to Intel as part of the Secure Enclave program.
Under the terms of the deal, the government will purchase 433.3 million primary shares of Intel common stock at a price of $20.47 per share, or about 9.9% stake in the company.
According to Intel, the U.S. government’s stake will be a passive ownership without board representation or other governance or information rights. The government will also agree to vote with the Board of Directors on matters requiring shareholder approval.
