JAPAN TIMES



 

SoftBank Group is buying about 2% of Santa Clara, California's Intel, the storied U.S. chipmaker that has lost ground in recent years in the race to build better and faster semiconductors.

The deal is the biggest investment by a Japanese company into the United States since the two countries reached a trade agreement on July 22.

In a statement, the companies said that SoftBank Group would be buying $2 billion of Intel shares for $23 apiece.

The U.S. chipmaker has a market capitalization of about $103 billion, which means that SoftBank is buying about 2% of the company's shares outstanding. The exact ratio wasn't mentioned in the announcement.

The transaction is subject to customary closing conditions, the companies noted in the Tuesday news release. They didn’t specify the exact timing and conditions of the announced transaction.

If the deal is completed, SoftBank would become the fifth largest shareholder of Intel.

“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,” SoftBank Chairman and CEO Masayoshi Son said in a statement on Tuesday.

The stock purchase follows a series of investment pledges by Son over the past several months.

With then-U.S. President-elect Donald Trump at Mar-a-Lago in Florida, Son, who founded SoftBank, pledged in December to invest $100 billion in the U.S. over the next four years.

Soon after Trump was sworn in as president in January, Son, OpenAI CEO Sam Altman and Oracle Executive Chairman Larry Ellison announced a $500 billion investment over the next four years in artificial intelligence in the U.S.

SoftBank Group had ¥4.2 trillion ($28 billion) in cash and equivalents at the end of June, according to the company’s consolidated financial report for the most recent quarter.

The company declined to confirm whether the Intel investment is part of Son's recent investment pledge.

Intel shares have lost half their value over the past five years. They were priced at $23.66 at market close Monday in the United States, and rose by about 5% following the news of the SoftBank Group deal in extended-hours trading.

SoftBank Group’s shares fell 2% in Tokyo trading on Tuesday morning, but are still up 96% over the past year.

Under the trade deal reached between Japan and the U.S. last month, Japanese government-affiliated financial institutions will provide up to $550 billion in loans, loan guarantees and equity investments for critical industries and technologies in the United States, in exchange for lower tariffs.

SoftBank Group declined to confirm whether the latest investment is connected to the $550 billion pledge outlined in the trade pact.

The latest investment pledge from the company came as the Trump administration contemplates buying 10% of Intel’s shares for over $10 billion, which would make the U.S. government the largest shareholder in the company.

The U.S. president has also suggested in recent days that new tariffs on semiconductors are coming soon, with the rate set as high as 300%.