Intel’s Deal With the U.S. Comes With a Catch

The first part of the U.S.-Intel deal is slated to close on Aug. 26, when Intel gets $5.7 billion in exchange for 275 million shares of the company’s stock. (David Paul Morris/Bloomberg)

New details emerged Monday about the U.S. government’s agreement to take a nearly 10% stake in Intel . The mechanics of the deal, as laid out in a securities filing, could become important to investors in the coming weeks and months. Here’s what we know:

The U.S. government won’t have to be a long-term holder of Intel stock. The Commerce Department is prohibited from selling its shares for a year. As of Aug. 26, 2026, the government is free to sell in “broadly-syndicated offerings.” Such a sale would put downward pressure on Intel’s stock.

The government’s purchase of Intel stock will come in two or three parts. The first will be 275 million Intel shares issued to the Department of Commerce in exchange for $5.7 billion, a share price of $20.74. That deal closes on Aug. 26.

The second tranche is more open-ended and tied to Intel receiving its payment for Secure Enclave, a special military project. The $3.2 billion disbursement from the government, previously allocated under the U.S. Chips Act, would give the government 159 million shares, valuing them at $20.00 a share. There’s a third tranche in the deal that gives the government 241 million warrants. Those units would convert into Intel common stock if the company’s stake in foundry, or manufacturing unit, falls below 51%. The warrants would convert at a $20.00 share price.

With the first two tranches of shares, and the total issuance of 433 million new Intel shares, the U.S. government’s stake in the chip maker would come to 9.0%, not 9.9% as Intel said in its press release on Friday. The company didn’t respond to a message seeking clarification about the stake.

Should the warrants come into play, the U.S. government’s stake would rise to 13.3%.

The Commerce Department’s shares will have voting rights, but it has agreed to vote with Intel’s board of directors on all issues.

The first tranche contains $1.5 billion that had previously been allocated to Intel pending the company making substantial progress on its new Ohio campus. Intel was unlikely to receive that money soon because the project has been shelved for at least several years. Under the new arrangement, the Ohio factory requirement is gone as is the monetary incentive for Intel to build the campus.

Intel stock continued to rise Monday in the wake of the deal news. Shares are up 6.8% over the last two trading days, to $25.10, a 23% premium to the price the U.S. government is paying for the stock.

Write to Adam Levine at adam.levine@barrons.com