Softbank Bets $2 Billion On Intel Having A Future

Japanese tech investment concern SoftBank has made a $2 billion investment in Intel.

The two companies announced the deal on Monday, with both framing it as a vote of confidence in Intel’s ability to manufacture chips on US soil.

“This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role,” said SoftBank Group CEO and chair Masayoshi Son. Intel CEO Lip-Bu Tan said SoftBank and Son share “our commitment to advancing U.S. technology and manufacturing leadership … and I appreciate the confidence he has placed in Intel with this investment.”

Investors have been less confident about Intel in recent years, as the company pursued a plan to operate a chipmaker-for-hire foundry business but struggled to secure major clients, and therefore posted significant losses.

SoftBank already owns fabless chip designer Arm, one of Intel’s main rivals. This new investment will see the Japanese company hold around two percent of Chipzilla’s scrip.

Intel’s share price jumped around six percent after the announcement.

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The companies announced the deal amid reports that the US government wants to take a 10 percent stake in Intel, perhaps by converting government grants to the company made under the US CHIPS Act into equity.

The rationale for government ownership of Intel would likely be to ensure it follows through on commitments to develop fabrication plants in the USA, to give the nation sovereign semiconductor manufacturing capacity. That’s desirable because no nation can thrive without access to quality semiconductors, and despite Intel’s myriad troubles it still produces fine processors.

The US military also relies on Intel to produce chips, which the company plans to make in “secure enclaves” that are kept separate from the facilities it uses to make other products.

If Uncle Sam takes a stake in Intel, it could conceivably influence the company’s investment, product development, and production plans.

Washington would struggle to do that at Samsung and TSMC, which have both made massive investments in stateside factories but are based in South Korea and Taiwan respectively.

Whatever the reasons for the Feds’ alleged interest in taking a stake in Intel, SoftBank clearly believes the chipmaker’s stocks will rise – literally and metaphorically. And it’s been a while since anyone was willing to express such optimism, never mind back it to the tune of $2 billion. ®