US government stake in Intel has jumped 300% to US$36 billion

SAN FRANCISCO – The value of the US government stake in Intel Corp. has increased fourfold to hit a value of about US$36 billion (S$45.9 billion) after the chipmaker’s financial outlook showed a resurgence in sales. 

That is the equivalent of an almost US$27 billion return on paper since Intel and the government announced the investment in August.

Chief executive officer Tan Lip-Bu secured the unconventional investment following a charm offensive to win over the White House and repair relations with President Donald Trump, who had called for Mr Tan’s ouster. 

The White House announced a deal that will likely see the US taxpayer owning 433.3 million shares of the company once certain conditions are met. The agreement priced the shares at US$20.47 apiece, valuing the stake at US$8.9 billion.

Taxpayers own more than 270 million shares directly, with some shares held in an escrow account. The paper valuation assumes that the US exercises all of its acquisition rights under the deal. 

Besides its investment in Intel, the Trump administration has announced more than a dozen other deals to bolster critical industries including rare earths, steelmaking and nuclear power.

Mr Trump is now considering a possible financial rescue of struggling Spirit Airlines that could give the US government the option to own as much as 90 per cent of the carrier once it emerges from bankruptcy.

“We were the chip capital of the world,” Mr Trump told reporters in Washington on April 23. And now Intel is “coming back”. “All the chip companies are coming back,” he added.

Intel shares rose 24 per cent to US$82.54 in New York on April 24. The percentage gain – Intel’s biggest since 1987 – propelled the stock to an all-time high. BLOOMBERG