Intel Corp (NASDAQ:INTC, ETR:INL) revealed that its near-$8 billion in US government subsidies come with restrictions on its ability to sell down its share of its chipmaking division following a spin-out.
According to a securities filing, Intel must retain at least 50.1% ownership of Intel Foundry Services if it is spun off as a private company.
Intel Foundry Services, which has been moved to subsidiary states ahead of a spin-off, aims to attract external investment and align with competitors like TSMC.
But if the division goes public, Intel will only be able to sell 35% of it to a single shareholder without triggering change-in-control provisions connected to the subsidies.
The subsidy is part of the US Commerce Department's $39 billion initiative to bolster domestic semiconductor production, benefiting Intel, Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) and others.
Intel must adhere to these conditions to advance its $90 billion US projects and continue manufacturing advanced chips domestically. Any ownership changes would require government approval.
The spin-off is part of the struggling group's efforts to consolidate its operations, delaying projects in Europe and Asia, and implementing cost-cutting measures.
As well as the subsidies, Intel has also secured a $3 billion US defense contract and a partnership with Amazon Web Services for AI chip development, reinforcing its role in key industries.
While rival Qualcomm Inc (NASDAQ:QCOM, ETR:QCI) has reportedly been interested in acquiring its older rival, this has apparently cooled, according to a recent Bloomberg story.