Intel is in the news again, this time for Japanese tech-finance powerhouse SoftBank pouring $2 billion to buy nearly 2% stake in the Santa Clara, California-based troubled chipmaker. SoftBank will buy Intel shares at $23 each in a move that seems more of a strategic interlock rather than a prelude to an acquisition.

SoftBank Chairman and CEO Masayoshi Son also called it a strategic investment in advanced semiconductor manufacturing, a hint that some industry watchers may equate to SoftBank eyeing opportunities in Intel’s massive fabrication infrastructure capable of producing high-end chips at advanced process nodes.

Now, combine this premise with another breaking news story about the U.S. government considering to acquire a 10% stake in Intel, which would involve converting billions in federal grants into direct ownership as equity. Intel, one of the biggest beneficiaries of the Chips and Science Act, has secured $10.9 billion in federal grants for building new semiconductor fabs in the United States.

A 10% stake in Intel is worth nearly $10.5 billion at the company’s current valuation of around $103 billion. According to the Bloomberg story, the U.S. administration is still reviewing legal, financial, and national security aspects of this transaction, which will make the U.S. government the largest shareholder in Intel.

While the U.S. officials have declined to comment on this matter, one thing is clear. The U.S. government is keen to recapture the chip fabrication edge that Intel lost to TSMC and Samsung Foundry more than a decade ago. The question is whether SoftBank’s $2 billion investment is tied to Intel’s foundry business rather than next-generation AI and data center processor development.

Son’s emphasis on “advanced semiconductor manufacturing” bolsters this premise. Now $2 billion isn’t a substantial amount in the capital-intensive foundry business; building a new fab operating at an advanced processor node could cost between $20 billion and $30 billion. However, SoftBank’s strategic partnership could amount to a crucial vote of confidence, especially when Intel Foundry is attempting to secure customers for its 18A and 14A process nodes.

It’s important to note that SoftBank has a majority stake in Intel’s instruction set architecture (ISA) rival Arm and is currently in the process of acquiring Ampere Computing, an Arm-based CPU developer founded by Intel veteran Renée James in 2017.

Besides the question of the focus area of SoftBank’s strategic partnership, the news about its $2 billion stake in a U.S. firm comes with little surprise. Soon after Donald Trump’s inauguration early this year, Son shared the stage with him alongside OpenAI CEO Sam Altman and Oracle co-founder and CEO Larry Ellison to announce the $500-billion Project Stargate focusing on AI data centers and power generation.

For a start, SoftBank’s helping hand to the Santa Clara, California-based chipmaker provides it with a much-needed stabilization. The United States wants Intel’s foundry operations to succeed and thus lessen U.S. semiconductor firms’ reliance on Asian fabs: TSMC and Samsung Foundry. Intel is the only American player capable of manufacturing chips at advanced process nodes.

A couple of months ago, Intel and SoftBank joined hands to build a stacked DRAM substitute to high-bandwidth memory (HBM). Now, this new tie-up is expected to bring a sense of calm and confidence to Intel, which is currently bleeding capital on foundry business losses while facing leaner fab rivals. It won’t solve deeper issues at Intel, but it could bring a welcome relief at the struggling semiconductor outfit facing one crossroads after another.

By: DocMemory
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