The US is now the proud owner of 10% of Intel. Donald Trump probably won't stop there.
The market is punishing Intel for losses in its product business, ignoring the growing strategic advantage of its new foundry business. Competitors (TSMC, Samsung) moving fabs to the U.S. neutralizes their price advantage and gives Intel, perfectly adapted to Western costs, a unique "home-field advantage". TSMC's strategy of building a technologically "lagging" fab in the U.S. artificially creates a protected niche for Intel's most advanced chips (18A) in the Western market.
Intel outlined several risks with the United States taking a 9.9% stake in the company. In an SEC filing, Intel said the deal could dilute shares and hurt its international business.
Intel (INTC) shares wavered to start the week after surging Friday following news that the U.S. government had reached a deal to take a 10% stake in the embattled chipmaker.
President Donald Trump says he's looking to make more deals like the one he announced last week with Intel (INTC), with the government taking a 10% stake in the chipmaker Friday.
U.S. equities were mixed and little changed at midday as the market awaited more key corporate earnings reports this week, including from Nvidia (NVDA). The Dow Jones Industrial Average and S&P 500 fell, while the Nasdaq gained.
Intel Corp (NASDAQ:INTC, ETR:INL) shares continued to gain momentum on Monday even after the company warned that the US government's stake could pose risks to its business. On Friday, the US government acquired a 9.9% stake in Intel by investing approximately $8.9 billion, marking one of the largest federal interventions in a US company since 2008, with an option to increase its stake by another 5% under specific conditions.
Intel (INTC) shares added to their Friday gains following word the U.S. had taken about a 10% stake in the struggling chipmaker.
Intel Corporation (NASDAQ: INTC) shares were trading at $25.25 on Monday, up 3.02% on the day and more than 22% higher over the past month, after President Donald Trump declared that the United States “paid zero” for its newly acquired stake in the semiconductor giant.
The past week has seen many decrying the folly of government picking winners in business. But the Trump administration's announcement of an 8.9 percent equity stake in chipmaker Intel is a reminder that government mostly picks losers.
Intel said on Monday that the 10% stake by the U.S. government in the chipmaker could pose risks to its business, from potentially harming international sales to limiting its ability to secure future government grants.
A look at the chart suggests shares aren't ready to break higher even after President Donald Trump announced the U.S. would take a 10% stake.