According to the latest report from Bloomberg, the U.S. government is currently discussing taking a 10% stake in Intel Corp. Late last week, we reported on Intel's CEO Lip-Bu Tan's visit to the White House to discuss the future of Intel as America's most important semiconductor manufacturer. And today, parts of the deal seem to be near completion, according to sources close to Bloomberg. Reportedly, some or all of Intel's CHIPS Act grants are going to be converted by the federal government into an equity stake in the company, which could help fuel further Intel Foundry expansion and R&D investments. Intel's CHIPS Act funding has reportedly not yet been reflected in the balance sheet, as the company has issued warnings in the past that these grants have been slow to arrive. However, under the new initiative, the U.S. government now plans to use this grant funding as a way to get equity in Intel Corp and become its largest shareholder with a 10% share.

Historically, Intel has been awarded roughly $10.9 billion in CHIPS Act grants for commercial and military applications. However, that funding hasn't materialized yet. What the U.S. now plans is a 10% stake, roughly worth $10.5 billion, which would practically mean the same thing, with voting power over company decisions as its largest stakeholder.Under its ex-CEO Pat Gelsinger, Intel Foundry was established as a separate business unit within Intel Corp.

Pat GelsingerTo build on our progress, we plan to establish Intel Foundry as an independent subsidiary inside of Intel. This governance structure will complete the process we initiated earlier this year when we separated the P&L and financial reporting for Intel Foundry and Intel Products.

A subsidiary structure will unlock important benefits. It provides our external foundry customers and suppliers with clearer separation and independence from the rest of Intel. Importantly, it also gives us future flexibility to evaluate independent sources of funding and optimize the capital structure of each business to maximize growth and shareholder value creation.

It is likely that the U.S. government could use this structure to go after Intel Foundry alone, as the primary focus of the government lies in leading-edge manufacturing. Still, we are yet to see official news confirming the deal, and we are looking forward to seeing how the structure of the deal looks like. Intel shares are down over 5% on the news.