Fine Print In Intel's CHIPS Act Deal Includes Requirement To Keep Control Of Its Foundries

Intel has quietly revealed that the $7.86 billion of cash coming its way thanks to the US CHIPS Act came with conditions that include Chipzilla retaining control of its foundries – an asset the struggling silicon giant may have intended to offload.

That condition and several others are spelled out in a November 27 filing [PDF] that reveals the CHIPS Act cash came with "change of control restrictions" that mean Intel must retain 50.1 percent ownership and/or voting rights in its foundry business if it's spun out as a separate private entity.

If the foundry goes public, no single shareholder will be permitted to hold more than 35 percent of its stock unless Intel remains the largest shareholder.

Any spinout must also see Intel remain a buyer of Intel Foundry's wafers.

The filing also reveals that Intel must continue chipmaking projects which the CHIPS Act funding is designed to assist.

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Uncle Sam's conditions are not remarkable. The whole point of the CHIPS Act is to boost semiconductor manufacturing on US soil to ensure the nation isn't reliant on others for critical chips. Were Intel or its foundry to be controlled by another entity, that goal would be at risk.

Intel, however, is currently in poor financial health. It recently restructured to make its foundry an independent business, to help it win customers other than Intel. Some have suggested going further and spinning out the foundry to raise cash.

The conditions revealed in Intel's filing still leave Chipzilla the option to do that – as long as it doesn't surrender control of the foundry.

Selling slices of companies is not unusual, but Uncle Sam's stipulations do mean Intel can't realize the full value of its chip manufacturing arm – which it might need to do, given its struggles. ®