US Eyes Non-Governance Role in Intel

Bloomberg

17 hours ago

00:00
Is this a good thing for Intel? It's a life saver. They were on an unclear path before the government decided to renegotiate its deal. Let's not forget that the U.S. government already had a deal with Intel. It's we're going to give you $6 billion and we're going to get a colored profit share down the line. What this administration is doing is just renegotiating the deal. It's saying that's not good enough. We want to take an equity stake. And by the way, Intel is different because part of this deal is a big Department of Defense component. Let's not forget, we're we're going to want Intel to manufacture chips for our F-35 and other important weapons systems. So the government has a different type of relationship, for instance, than it does with TSMC, where we're just talking about making chips for data centers. So the government renegotiated the deal and now when it's done that it's not a coincidence that Lee Boutin can go to his friend, his son, and say, okay, this is the time for SoftBank to invest as well and maybe line up some arm demand for those 14 chips down the line. I'm so interested in the ARM architecture side of this. How do you see these working hand in hand going forward? How more cemented could a relationship become? Well, clearly, it could be part of the deal. And more importantly for Intel, as of a week ago, they had no customers for a for the 14 architecture. And they said they may not even proceed with it. Now, they might have one lined up. Let's not forget, the Department of Defense is a customer that's now more likely to be lined up for that, and then they can go and talk to the other companies. And even if the government doesn't have it doesn't go ahead and twist some arms, let's not forget. And Nvidia has committed half a trillion dollars of investment in the US. So can the government now can President Trump call Jensen Huang and say, Hey, this is part of how I want to see the investment play out. I need for you to be a customer of 14. That's not inconceivable at this point. And again, remember, this is national security. So the rules of the game change. Once we say this is national security, the rules of the game are often blurred by frenemy lines. Gil And what's so interesting is Masa has had a long term relationship with the CEO of In Video. Of course, Jensen Huang. But also in some ways wants to build a competing architecture in some ways. What's the take on NVIDIA in terms of A.I. chips? Could he do that with Intel's help? It's one way for him to participate in an even more broad fashion in the growth of AI, which he's doing now. He he regrets selling in video when he did. He's buying some of it back, but he's also making a set of other investments in air infrastructure. Let's not forget, Stargate is probably the the flag bearer of of his effort combining with open A.I. and Oracle to build again at least $100 billion worth of datacentre capacity. And for that it would make sense to diversify and not only buy in video chips. Now that's going to take a while. And Nvidia not only has a lead, but continues to extend its lead every year. But it does make sense for for him and for other companies to try to diversify away from in video. What's interesting is how a lot, Nic, the commerce secretary had said, look, we will be we confirm that we're looking at taking an equity stake, didn't say how much, but it wouldn't be with a governance role. Now, more broadly, how are you starting to analyze companies that are getting closer and closer to the US government and how much well, is it interference or is it positive help that is being led by a US government here? Well, the U.S. government has an ability to to make to give preferential treatment to some of these companies to to change the rules of the road. And it wants equity participation when it does that. And again, it's not doing it broadly. It's doing it when it's a matter of national security. Let's not forget, it's already very involved with Nvidia. It's limiting their chip sales to China. It's already very involved with open air. This may be quiet, but it's pretty safe to assume the Department of Defense gets briefs from open air very frequently about where the models are. So the government is involved because it's national security. In Intel's case, it's a matter of if this is this century's nuclear arsenal, we need somebody to make the shell casings domestically. We have. We can't have a Taiwanese company and a Korean company make our shell casings for our nuclear arsenal. So in Intel's case, it's a much deeper involvement. And I wouldn't be surprised if there are if there is input into where the investments go, what the governance is, even if it's not explicit.