SoftBank Acquires a 2% Stake in Embattled Intel

Intel’s turnaround may just require something of a team effort.

On Tuesday, Japanese investment giant SoftBank announced it had taken a $2 billion stake in Intel, with plans to help supercharge the struggling chipmaker’s revival. The deal, which gives SoftBank control over roughly 2% of Intel’s outstanding shares, comes as the US government explores a deal to take as much as a 10% stake in the Santa Clara, California, firm.

Chip Stack

That’s a lot of a lot. Intel needs it all and maybe more. While it’s technically the only major designer and manufacturer of leading-edge chips in the US, the company has largely failed to convince tech players that its Gaudi AI Accelerator chips could serve as a viable alternative to Nvidia’s popular GPUs, while its expensive foundry business has completely failed to compete with industry titan TSMC. The company has reported a total net loss of around $3.7 billion through the first half of the year, after a staggering $18.8 billion net loss in fiscal 2024, and has openly flirted with exiting the foundry business if it fails to secure a major client soon.

Enter SoftBank. According to sources who spoke with the Financial Times, the two sides discussed several versions of a deal — including one in which SoftBank would have acquired Intel’s foundry business outright — but ultimately agreed on a $2 billion investment that gives Intel a major financial lifeline amid its search for clients and its capital-intensive push to catch up to TSMC’s manufacturing capacity. Crucially, it also places Intel into SoftBank’s growing AI ecosystem:

• SoftBank is already the majority owner of British chip designer Arm and is a leading investor in OpenAI, which is working to reduce its reliance on key supplier Nvidia. Last week, Reuters reported that current and former OpenAI employees were looking to sell up to $6 billion worth of shares to a SoftBank-led group of investors.
• SoftBank and OpenAI also have ambitious plans to expand AI infrastructure in the US, primarily through the $500 billion “Project Stargate” initiative the two firms announced earlier this year with Oracle. 

Central Intel-igence: Of course, SoftBank isn’t the only player to notice that Intel is struggling. The company scored roughly $10.9 billion in grants and low-interest loans from the US government via the Biden-era Chips and Science Act, and now the Trump administration wants to get an equity stake in exchange for that. US Commerce Secretary Howard Lutnick made clear in an interview with CNBC on Tuesday that the White House isn’t seeking voting or governance rights in Intel, however. The idea comes after the president earlier this month publicly called for the resignation of new Intel CEO Lip-Bu Tan (who happens to be a former SoftBank board member) over alleged ties to the Chinese government. After a White House meeting with Tan this week, the president said Tan has an “amazing story” — one that, apparently, he prefers the US government to be a part of.