The U.S. government plans to convert the original $8.9 billion subsidy to Intel into equity, including a $5.7 billion subsidy that has not been paid, and a $3.2 billion grant from the Secure Enclave, the core security nation. Morgan Stanley (Mordan) analyst Joseph Moore has also expressed his views on the matter recently, but he believes that there is no quick solution to save Intel.
According to the agreement, the US government will purchase 433.3 billion new shares of Intel at a price of US$20.47 per share, equivalent to 9.9%. Intel emphasized that the investment of the US government, as "passive investment", will not enter the company's board of directors and will not enjoy the right to disclose information.
In addition, the U.S. government has also negotiated a five-year equity licensing price of $20 per share. When Intel sold more than 49% of the Crystal Foundry business, the government had the right to increase its holdings of the company's common stock by 5%. The outside world speculated that this may make Intel more cautious when leaving the chip foundry department.
Judging from the current situation, the Trump administration clearly believes that this transaction can bring Intel a "spirit"-like effect, because White House economic consultant Kevin Hassett mentioned when he was interviewed by CNBC that this will help Intel "return to the main".
However, it may be more complicated. Morgan Stanley analyst Joseph Moore believes that Intel's transformation will be a long process, "Intel's recovery needs to start with improving the product blueprint of the microprocessor, without a quick fix."
When discussing Intel's overall crystal foundry strategy, Moore said that it should be the first to stabilize its microprocessor market share. If it cannot be kept, it will be difficult to achieve the necessary scale and cannot make strong investments in advanced processes such as the next generation 14A. According to the information revealed by Intel itself, its old-generation 10-nanometer and 7-nanometer products are now sold out, indicating that customers think these old products are more valuable than the newly launched Intel 4.
In addition to holding shares in the US government, Moore believes that if the fund comes with conditions that force Intel to make strategic decisions, this is not the best way, especially the future of the GEM foundry business should be based on financial and strategy, rather than on the love situation.
Currently, Intel's crystal foundry department accounts for more than US$10 billion per year and its net debt exceeds US$20 billion, making the profit balance point out of reach. Moore said that Intel is still exploring different reorganization paths, from IDM 2.0 mode that supports both processor and foundry, to return to IDM 1.0, and even to "fab lite" mode, each path must be abandoned, and IDM 2.0 has the greatest potential. But if Intel cannot deliver advanced performance in the server domain, it will also be accompanied by the highest risk.
At the same time, Moore also praised Chen Liwu's "predictive style of being cautious and conservative." He believes that if Intel re-returns to the market share of microprocessors and adjusts the cost to a USD 60 billion in operating margin, it can still easily create visible reports, but this situation is not based on new crystal plants or complex government plans.
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