Intel stock jumps on $2 billion SoftBank investment
Intel (INTC) is receiving a $2 billion capital injection from SoftBank Group (9984.T), signaling strong investor confidence in the struggling U.S. chipmaker during its ongoing turnaround, News.Az reports, citingReuters.
Intel stock rose 5% before the bell on Tuesday, while Softbank's Tokyo shares closed 4% down.
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.
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.
It 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.
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 6.6% in U.S. premarket 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.
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