Trump administration’s deal is structured to prevent Intel from selling foundry unit

The Trump administration seems intent on controlling Intel’s ability to make key business decisions around its floundering foundry business unit.

According to reporting from the Financial Times, at a Deutsche Bank conference on Thursday, Intel’s CFO David Zinsner shared new details about the company’s recent deal with the Trump administration, which gave the U.S. government a 10% equity stake.

The deal was structured in a way to penalize Intel if it spins out its foundry business unit, which makes custom chips for outside customers, within the next few years.

Last week’s deal included a five-year warrant that would allow the U.S. government to take an additional 5% of Intel, at $20 a share, if the company held less than 51% equity in its foundry business. Zinsner said he expects that warrant to expire.

“I think from the government’s perspective, they were aligned with that; they didn’t want to see us take the business and spin it off or sell it to somebody,” he said.

Zinsner added that the company received $5.7 billion in cash on Wednesday, as a result of last week’s deal, according to Reuters. (That cash comes from the remaining grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act.)

White House press secretary Karoline Leavitt told reporters today that the deal was still being ironed out.

Intel declined to comment on the deal beyond Zinsner’s remarks.

This deal structure is clearly a testament to the Trump administration’s desire to bring more chip manufacturing to the United States as many players in the industry turn to Taiwan Semiconductor Manufacturing Company’s offshore manufacturing instead.

But this warrant also forces Intel to keep a business unit that is losing money. Intel Foundry reported an operating income loss of $3.1 billion during the second quarter and has been a source of strife for the semiconductor business.

There have been calls from analysts, board members, and investors alike to spin out the struggling foundry unit, which looked like it might actually happen last fall, before Intel Foundry’s architect, former CEO Pat Gelsinger, retired suddenly in December.