Intel secures $2bn lifeline from Japan's SoftBank
The Japanese technology investor announced the multibillion-dollar deal on Tuesday, in a move expected to give it a 2% stake in the business.
Masayoshi Son, the chief executive and chair of SoftBank, described Intel as a 'trusted leader in innovation'.
'This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the US, with Intel playing a critical role,' he said.
Shares in the chip maker, which is listed in New York, rose by more than 5% in after-hours trading, while shares in Tokyo-listed SoftBank dropped by about 4%. Intel is valued at more than $100bn.
It comes amid reports the US government is also considering taking a stake in Intel. It could be as high as 10%, according to Bloomberg.
Lip-Bu Tan, an industry veteran who took the top job at Intel just four months ago, has been tasked with a huge turnaround project at the business. The company has suffered from slow sales and continued losses as it has struggled to maintain its technological edge in recent years.
On Tuesday, Tan said Intel was 'very pleased to deepen our relationship with SoftBank, a company that's at the forefront of so many areas of emerging technology and innovation and shares our commitment to advancing US technology and manufacturing leadership'. He has 'worked closely together [with Son] for decades', he added.
Donald Trump initially called for Tan's resignation, accusing him of having ties to the Chinese Communist party. However, after meeting with Tan in Washington last week, the president praised the Intel boss, saying he had 'an amazing story'.
If the US government takes a 10% stake in the business, it could surpass asset manager Vanguard as the chip makers's single biggest shareholder. It would mark the Trump's administration latest attempt to intervene in an area of the private sector that it considers nationally strategic.
Trump has previously threatened to impose tariffs of up to 100% on imported semiconductors and chips, which could favour Intel as a US-based semiconductor business.
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Earlier this month the US government announced a deal that would result in chip makers such as Nvidia and Advanced Micro Devices (AMD) paying 15% of their revenue from Chinese AI chip sales to the US government. In July, the defence department also announced that it would take a $400m preferred stake in the US rare-earth producer MP Materials.
For SoftBank, the Intel investment expands its presence in the US, while the Japanese government pushes Trump to cut tariffs in exchange for investment in the American economy.
The Japanese company committed to increasing its presence in the US last year, and Trump announced in December that SoftBank would pour $100bn in the US economy over the next four years.
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