Trump administration’s deal is structured to prevent Intel from selling foundry unit

Image Credits: Intel Corporation

The Trump administration has taken deliberate steps to influence Intel’s corporate direction, especially regarding its key foundry business. In an effort to ensure domestic chip production remains strong, a recent agreement sets restrictions and incentives that make it highly challenging for Intel to divest or spin off its struggling foundry unit.

Key Terms of the Deal

Recently, Intel secured a deal with the Trump administration that results in the U.S. government taking an initial 10% equity stake in Intel. According to Intel’s CFO David Zinsner, this agreement goes further: it is structured to penalize the company if it tries to spin off its foundry division—responsible for producing chips for external clients—within the next several years.

The arrangement includes a five-year warrant that allows the government to acquire an additional 5% of Intel at a set price if Intel’s ownership of its foundry business drops below 51%. Zinsner indicated he expects this warrant to expire unused, signaling the company’s intention to retain control. He added, "I think from the government’s perspective, they didn't want to see us take the business and spin it off or sell it to somebody."

Following the agreement, Intel received $5.7 billion in cash payments, sourced from previously allocated grants under the U.S. CHIPS and Science Act. However, U.S. officials noted that some aspects of the deal are still being finalized.

US Industrial Policy Meets Corporate Strategy

This approach showcases a clear intent by the administration to foster more chip manufacturing on American soil and reduce dependency on overseas capabilities, notably those offered by Taiwan Semiconductor Manufacturing Company (TSMC). Yet, the deal forces Intel to keep its foundry division, which reported an operating loss of $3.1 billion in the latest quarter—and which has provoked calls from investors and analysts for a possible spinout or sale.

There was even speculation last fall that Intel could offload the unit, especially after the company’s former CEO Pat Gelsinger—one of the foundry's main architects—suddenly retired. For now, management is expected to comply with the stipulations, keeping the embattled division in-house.

Deep Founder Analysis

Why it matters

This development is significant for startups and tech founders as it highlights how national industrial policy can directly steer the strategy of major private companies. The U.S. is signaling a resolve to build technological resilience by maintaining domestic production not just through subsidies, but through formal ownership and governance controls. For startups, this marks an era where public-private partnerships—and the strings attached—are set to become more prevalent, influencing exit strategies, capital formation, and operational autonomy.

Risks & opportunities

Among the risks, enforced retention of unprofitable divisions may hamper innovation and responsiveness, potentially dragging down the broader company's performance. Conversely, the opportunity lies in the government’s willingness to devote equity capital to secure critical technology infrastructure. Startups in the semiconductor or deep-tech supply chain may find new pathways for funding or collaborative R&D projects, but must be alert to changes in market dynamics driven by regulatory or political interference.

Startup idea or application

One actionable idea is to create a SaaS platform enabling hardware and semiconductor firms to model policy-driven corporate constraints and simulate strategic outcomes. This would help companies navigate investment, divestiture, and international expansion decisions in an environment where industrial policy increasingly shapes market realities. Alternatively, a data-driven advisory network could match early-stage innovators with government grant, equity, and partnership opportunities, expediting the commercialization of critical hardware technologies.

Further Reading & Related Topics

For more on the intersection of policy, tech manufacturing, and startup opportunity, see Nvidia Posts Record Revenue as AI Demand Drives Massive Growth and Tesla Declined $60M Settlement Before $242.5M Autopilot Verdict: What Startups Can Learn on the Deep Founder blog.

Industrial Policy Semiconductors Intel Public-Private Partnerships CHIPS Act

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