TLDR
- Trump Administration secures 9.9% stake in Intel through $8.9 billion investment using CHIPS Act funds and Secure Enclave program
- SoftBank agrees to invest $2 billion for just over 2% stake at $23 per share, bringing strategic partnership potential
- Total government investment reaches $11.1 billion including previously awarded CHIPS grants
- Intel’s market cap currently sits at $107 billion, down from $200 billion in early 2024
- Company trades at price-to-book ratio of 1.1, close to liquidation value levels
Intel faces a pivotal moment as two major investors inject billions into the struggling chipmaker. The Trump Administration finalized an $8.9 billion investment securing a 9.9% stake in the company.
The government purchase involves 433.3 million primary shares at $20.47 each. Funding comes from $5.7 billion in remaining CHIPS Act grants and $3.2 billion from the Secure Enclave program.
This brings total government investment to $11.1 billion when including $2.2 billion in CHIPS grants already received. The administration pledged not to seek board representation and will vote with current directors on shareholder matters.
President Trump called it a “great Deal for America” in his statement. He emphasized Intel’s role in building leading edge semiconductors as fundamental to the nation’s future.
The government paid nothing upfront for these shares. Trump valued the stake at approximately $11 billion based on current market prices.
Strategic Partnership with SoftBank
SoftBank separately agreed to invest just over $2 billion in Intel at $23 per share. This gives the Japanese conglomerate slightly more than 2% of outstanding shares.
The timing is interesting given SoftBank’s previous talks to buy Intel’s foundry division. Those discussions shifted to this equity investment instead.
SoftBank owns a 90% stake in chip-design firm Arm Holdings. This connection could prove valuable for Intel’s foundry business recovery efforts.
Arm specializes in designing and licensing CPU cores built around its architectures. A partnership could give Intel’s struggling foundry operations the competitive edge it needs.
Intel operates more chip foundries in the U.S. than any other company. Former CEO Pat Gelsinger opened this capacity to third-party chip designers as a recovery strategy.
Financial Position and Recovery Path
Intel’s current market cap stands at $107 billion, a level first reached in 1997. The stock trades at a price-to-book ratio of 1.1, suggesting the company is worth only slightly more than its liquidation value.
This represents a dramatic fall from Intel’s $200 billion market cap at the beginning of 2024. The stock would need to approximately double to return to those levels.
Intel plans $18 billion in capital expenditures for 2025 alone. The company continues investing heavily despite losing ground to competitors like Taiwan Semiconductor.
Taiwan Semiconductor pledged $165 billion for U.S. facility construction over several years. This highlights the scale of competition Intel faces in the foundry market.
The SoftBank investment may seem small compared to these massive capital requirements. However, the strategic value through the Arm connection could prove more important than the dollar amount.
Intel’s foundry business has struggled to land major customers despite billions in facility investments. The Arm partnership could change this dynamic.
The combination of government backing and SoftBank’s strategic assets creates new possibilities for Intel. Both investments signal rising confidence in the company’s potential turnaround.
Intel’s stock reflects deep skepticism about its recovery prospects. The rock-bottom valuation suggests limited downside risk for new investors at current levels.
