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Intel outlined several risks with the United States taking a 9.9% stake in the company.
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In an SEC filing, Intel said the deal could dilute shares and hurt its international business.
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Intel’s future funding options could also be negatively affected.
Business deals often involve risk — even when you’re dealing with the United States government.
Intel acknowledged several risks the company faces with the US taking a 9.9% stake in the chipmaker via an investment of $8.9 billion in common stock. It’s a rare deal in which the government is taking a financial stake in a publicly traded company.
Intel, which has been working on a turnaround, announced the deal on Friday, saying it reflected “the confidence the Administration has in Intel to advance key national priorities and the critically important role the company plays in expanding the domestic semiconductor industry.”
In a Monday filing to the Securities and Exchange Commission, the company outlined a number of “risk factors” related to the US government’s investment, from negative impacts on shareholders to hindering future opportunities. Companies often add to their risk factors to fend off litigation — these sections can run for pages in quarterly filings, addressing everything from cyberattacks to pandemics.
Intel said in the filing that because it was issuing stock to the government at a discount, it would dilute the shares of existing stockholders. The company added that shares could be diluted further if the government purchases more shares in the future.
Intel said the deal could make the US government its largest stockholder, adding that it would reduce the voting rights and power of existing stockholders.
“The US Government’s interests in the Company may not be the same as those of other stockholders,” the filing said.
The SEC filing also said the US government’s powers could “substantially limit” Intel’s ability to pursue future transactions that would benefit shareholders, including by deterring some third parties from engaging with the company.
Intel said 76% of the company’s sales came from outside the US in the 2024 fiscal year. The company’s non-US business could be negatively affected by the US government’s status as a major stockholder, which could also subject the company to additional regulations and restrictions abroad.
Intel said in the SEC filing that the deal, which involves converting government grants into an equity stake in Intel, could limit its ability to secure government grants in the future.
