Softbank invests $2 billion in Intel as Trump administration also weighs 10% equity stake

SoftBank Group has made a significant investment of $2 billion in Intel, aiming to bolster the American chipmaker as it navigates a challenging landscape marked by fierce competition and financial hurdles. This strategic move, announced on Monday, positions SoftBank as one of Intel's top shareholders, acquiring an equity stake of nearly 2%. The investment comes at a price of $23 per share, just shy of Intel's closing price of $23.66 on the same day, making SoftBank the sixth largest investor in the company, according to data from LSEG. Intel, which once held a commanding position in the semiconductor industry, reported an unprecedented annual loss of $18.8 billion earlier this year, marking its first such loss since 1986. The company has been losing ground to competitors like AMD in both personal computing and server chips, and its contract manufacturing efforts have struggled to rival the scale of Taiwan's TSMC. Masayoshi Son, the CEO of SoftBank, expressed that this investment reflects confidence in the future of advanced semiconductor manufacturing in the United States. This move is also part of SoftBank's broader ambitions in the realm of artificial intelligence, which includes a substantial $500 billion Stargate data center initiative and a $30 billion stake in OpenAI. Interestingly, SoftBank does not plan to secure a board position at Intel or commit to purchasing its chips, as per sources familiar with the situation. Following the announcement, SoftBank's shares dipped over 5% in Tokyo, while Intel's stock experienced a 5.6% increase in after-hours trading. Simultaneously, reports indicate that the U.S. government is contemplating a 10% equity stake in Intel, which could position it as the largest shareholder if the investment is finalized. Discussions focus on the potential conversion of some or all of Intel's $10.9 billion in grants from the Chips and Science Act into equity. At current valuations, such a stake would equate to approximately $10.5 billion, with Intel having already received $2.2 billion of these funds. While the White House has yet to confirm these reports, spokesperson Kush Desai noted that no agreements are official until announced by the administration. Intel has remained silent on the matter. This potential government investment follows a recent meeting between President Donald Trump and Intel CEO Lip-Bu Tan, which was reportedly triggered by Trump’s demand for Tan's resignation over alleged connections to Chinese companies. However, SoftBank's investment is understood to be independent of these discussions. Analysts suggest that Intel's unique position as both designer and manufacturer could still enable it to compete effectively against TSMC, provided it can realize its long-term strategic goals, with support from both private and public investors being essential for its recovery.