SoftBank invests $2 bn in Intel as chip giant hopes to revive fortunes

SoftBank Group is investing $2 billion in Intel, buying about 87 million shares at $23 each. The move gives the Japanese firm a nearly 2 per cent stake, making it Intel’s sixth-largest shareholder, according to a report by The Wall Street Journal.

 

Why it matters

 

Intel has been struggling with steep losses and delays in major projects. The shares of the chip giant lost 60% of their value last year as it could not gain traction in the artificial intelligence (AI) market, which is dominated by Nvidia. The investment is likely to help Intel build a flagship manufacturing hub in Ohio, according to a report in BCC.   

 

 

Market reaction

 

SoftBank’s deal was seen as a sign of confidence in Intel. Shares surged 4.5 per cent in after-hours trading, after dropping 3.7 per cent earlier in the day, The Wall Street Journal report said.

 

The bigger picture

 

• Intel posted a $2.9 billion loss in Q2 and is seeking large customers for its new AI chips.

• The company has been the largest beneficiary of the 2022 Chips and Science Act, which allocated about $8 billion for new facilities in Ohio and other US states.

• Some officials now want to convert those subsidies into government equity in Intel, a move they said would better safeguard taxpayer money.

 

Intel's concerns

 

• Intel’s Ohio facility has been plagued by years of delays, frustrating lawmakers who accuse the company of misleading the government.

• Commerce Secretary Howard Lutnick is exploring how equity stakes might give taxpayers better returns than traditional subsidies.

• A 10 per cent government stake would make Washington one of Intel’s largest shareholders, given the company’s $100 billion market value.   

 

Intervention in private sector

 

The Trump administration has increasingly intervened in the private sector. Recent deals include:

• Securing a 15 per cent revenue share from Nvidia and AMD’s China sales in exchange for export licenses.

• Gaining a “golden share” in Nippon Steel’s takeover of US Steel.

 

The track record

 

• Intel’s share price has dropped more than 50 per cent since early last year.

• Analysts argue its products lag behind rivals in the AI era.

• SoftBank, led by Masayoshi Son, has invested heavily in tech giants like Amazon, Apple and Arm Holdings.