FILE PHOTO: The logo of SoftBank is displayed at a company shop in Tokyo, Japan January 28, 2025. REUTERS/Issei Kato/File Photo
(Reuters) -Intel is getting a $2 billion capital injection from SoftBank Group in a major vote of confidence for the troubled U.S. chipmaker in the middle of a turnaround.
The equity investment, announced by the companies on Monday, is a lifeline for the once-iconic U.S. firm 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 semiconductor and AI assets that includes the $500 billion Stargate U.S. datacenter project.
SoftBank also held talks with Intel on buying its contract chipmaking business ahead of the investment announcement, the Financial Times reported on Tuesday, citing multiple people with knowledge of the talks.
Intel has invested billions of dollars in setting up a contract manufacturing business that has struggled to compete with Taiwan's TSMC and barely attracted external customers.
"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 U.S. 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.
On reports of the government considering a 10% stake in Intel, U.S. Treasury Secretary Scott Bessent said any U.S. investment would be to help the company stabilize, but the government would not force U.S. companies to buy Intel chips.
"The last thing we're going to do is take a stake and then try to drum up business. The stake would be a conversion of the grants and maybe increase the investment into Intel to help stabilize the company for chip production here in the U.S.," Bessent said, referring to grants allocated under the CHIPS Act.
Bessent did not provide details about the size or timing of any U.S. stake.
SoftBank's funding also comes as Tokyo pledged a $550 billion investment package into the U.S. 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 United States, with Intel playing a critical role," Son said in a statement.
It will pay $23 per Intel share, a slight discount to Monday's closing price of $23.66.
SoftBank's investment will come via a primary issuance of common stock by Intel, and, based on the U.S. company's market capitalisation at close of trading on Monday, represent an equity stake of just under 2%, an Intel spokesperson said.
The Japanese company would become the sixth largest investor in Intel, according to LSEG data.
SoftBank shares closed down 4% on Tuesday following the announcement, while Intel surged more than 7%.
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.
MULTIPLE CHALLENGES
Intel has struggled financially and recorded an annual loss of $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 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.
SoftBank's Son held talks with Tan since his appointment as Intel CEO in March to discuss a potential deal, according to the FT's Tuesday report.
They discussed a wide range of outcomes, including joint ventures with third parties or a minority investment similar to Monday's announcement, according to the report.
The $2 billion investment did not preclude a bigger deal over Intel's foundry business in the future, the report said.
SoftBank and Intel did not immediately respond to Reuters requests for comment on the report.
"Intel's dual role as designer and manufacturer/fabricator uniquely positions it as potentially the best platform in the U.S. to compete with TSMC," said Charu Chanana, chief investment strategist at Saxo.
Bloomberg News reported earlier on Monday that the U.S. 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.
Tan, a chip industry veteran who also served as a SoftBank board member before quitting in 2022, thanked Son for "the confidence he has placed in Intel with this investment."
The Intel funding is the latest in the Japanese company's run of mammoth investment announcements in 2025, which include committing $30 billion to ChatGPT maker OpenAI as well as leading the financing for Stargate.
(Reporting by Jaspreet Singh in Bengaluru, Max Cherney in San Francisco and Anton Bridge in Tokyo; Additional reporting by Angela Christy and Arsheeya Bajwa in Bengaluru, Sam Nussey in Tokyo, Ankur Banerjee in Singapore and Tamiyuki Kihara; Writing by Miyoung Kim; Editing by Alan Barona and Muralikumar Anantharaman)
