SoftBank's Stake Expected to Reach 2%
Intel Shares Surge 5.4%
Bloomberg: "U.S. Government Could Become Largest Shareholder"
Japan's SoftBank Group, led by Chairman Masayoshi Son, announced that it will invest $2 billion (approximately 2.8 trillion won) in Intel, following news that the Donald Trump administration in the United States is considering an equity investment in the company.
On August 19, SoftBank Group announced that it had signed an agreement with U.S. semiconductor company Intel to acquire Intel shares by investing $2 billion. The company plans to purchase Intel common stock at $23 per share (about 31,940 won), which is similar to Intel's closing price of $23.66 on the New York Stock Exchange on August 18.
According to Reuters, an Intel spokesperson said on August 18 that, based on a market capitalization of approximately $103.6 billion, SoftBank Group's stake would be just under 2%. Market data provider LSEG predicted that SoftBank Group would become Intel's sixth-largest shareholder.
SoftBank Group explained that this investment was made as both Intel and SoftBank Group are further strengthening their investments in advanced technology and semiconductor innovation in the United States. The company added that it aims to accelerate access to advanced technologies supporting digital transformation, cloud computing, and next-generation infrastructure, in order to pursue its long-term vision of realizing the artificial intelligence (AI) revolution.
Chairman Masayoshi Son stated, "Semiconductors are the foundation of all industries, and Intel has been a trusted leader in innovation for over 50 years. With this strategic investment, I expect that advanced semiconductor manufacturing and supply, where Intel plays a crucial role, will further develop within the United States." Intel CEO Pat Gelsinger expressed his pleasure at further strengthening ties with SoftBank Group, which has led the way in advanced technology and innovation.
Nihon Keizai Shimbun (Nikkei) commented on the investment, saying, "It is known that the Donald Trump administration is planning to invest in Intel. SoftBank Group is supporting advanced semiconductor production in the United States in line with the U.S. administration."
Previously, Bloomberg reported on August 18 (local time) that the Trump administration is discussing acquiring a 10% stake in Intel, which is experiencing management difficulties. Sources said the federal government is considering converting some or all of the subsidies provided to Intel under the CHIPS Act into equity investment.
In November last year, under the previous Joe Biden administration, the U.S. Department of Commerce announced that it would provide up to $7.865 billion (about 10.9 trillion won) in subsidies to Intel. Separately, Intel is expected to receive an additional $3 billion subsidy for military semiconductor production. Subsidies for Intel are paid out sequentially based on project milestones, and as of January this year, $2.2 billion had been disbursed.
If this measure is implemented, the U.S. government could become Intel's largest shareholder, given the substantial subsidies involved. However, sources added that the specific stake size and whether the administration will actually proceed with the plan remain uncertain.
The federal government's consideration of acquiring an Intel stake reportedly originated from a meeting between President Trump and Intel CEO Pat Gelsinger on August 11. On August 7, President Trump had called for Gelsinger's immediate resignation, citing alleged ties to the Chinese government and companies, but after the meeting, he praised Gelsinger, saying, "His success and rise is an amazing story."
The Trump administration's equity investment in a private company is similar to a recent case in which the Department of Defense announced a $400 million investment to acquire a 15% preferred share stake in rare earth producer MP Materials. This is an unprecedented move, and the Department of Defense will become MP Materials' largest shareholder through this transaction.
Meanwhile, on this day, Intel's stock closed down 3.66% at $23.66, but rose 5.41% to $24.94 in after-hours trading.
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