TOKYO: Intel is getting a US$2 billion (RM8.4 billion) capital injection from SoftBank Group in a major vote of confidence for the troubled US chipmaker that is in the middle of a turnaround effort.
The equity investment, announced by the two companies on Monday, is a lifeline for the once-iconic US chipmaker which has struggled to compete after years of management blunders that left it with virtually no foothold in the booming artificial intelligence chip industry.
It will make SoftBank a top-10 shareholder of Intel and add to the Japanese tech investor’s ambitious bet on artificial intelligence that includes the US$500 billion Stargate US data centre project.
“SoftBank’s investment helps, but it is not what is going to move the dial for Intel,” said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors.
“It’s more to maintain this very good relationship he has with Trump,” he said, referring to SoftBank CEO Masayoshi Son.
The deal follows media reports last week that the US government may buy a stake in Intel, after a meeting between new CEO Lip-Bu Tan and President Donald Trump that was sparked by the president’s demand for Tan’s resignation over his ties to Chinese firms.
It also comes as Tokyo pledged a US$550 billion investment package into the US last month as part of a trade deal with Washington.
The Intel investment is not currently part of that package, a Japanese government source with knowledge of the negotiations said.
SoftBank’s decision to invest in Intel is not connected to Trump, a person familiar with the matter told Reuters. The White House did not immediately respond to a request for comment.
“This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the US, with Intel playing a critical role,” Son said in a statement.
It will pay US$23 per Intel share, a slight discount to Monday’s closing price of US$23.66.
SoftBank’s investment will come via a primary issuance of common stock by Intel, and based on the US company’s market capitalisation at close of trading on Monday, represent an equity stake of just under 2%, an Intel spokesman said.
The Japanese company would become the sixth largest investor in Intel, according to LSEG data.
SoftBank shares closed down 4% yesterday following the announcement, while Intel surged 5.6% in after-market hours trading.
The Japanese company will only take an equity stake in Intel and will neither seek a board seat nor commit to buying Intel’s chips, the person familiar with the matter said.
Intel has struggled financially and recorded an annual loss of US$18.8 billion in 2024, its first such loss since 1986, as it grapples with multiple challenges.
Its longtime rival AMD has been gaining share in Intel’s mainstay personal computer and server semiconductor markets, while its ambitious and costly plan for a chip contracting business that rivals that of Taiwan’s TSMC has failed to take off.
The company is now considering a significant change to its contract chip manufacturing business to win major customers, Reuters reported last month, in a potentially expensive shift from its previous strategies.
“Intel’s dual role as designer and manufacturer/fabricator uniquely positions it as potentially the best platform in the US to compete with TSMC,” said Charu Chanana, chief investment strategist at Saxo.
Bloomberg News reported earlier on Monday that the US government is in talks to take a 10% stake in Intel.
SoftBank declined to provide more details on the Intel investment when asked to comment by Reuters.
