Recent capital infusions into Intel (NASDAQ:INTC) have strengthened the company’s balance sheet, but they also make a near-term sale or spin-off of its foundry operations improbable, according to Bank of America analysts.
Intel recently secured $2 billion in equity from SoftBank at $23 per share and $8.9 billion from the U.S. government, representing a 9.9% stake at roughly $20.47 per share.
The bank noted that the government’s investment “represents a mix of new capital received from the former and a pull forward of previously awarded CHIPS Act grants ($5.7B) and Secure Enclave contract ($3.2B).”
Additionally, the U.S. government will hold a 5% warrant at $20 per share, exercisable only if Intel’s stake in Intel Foundry falls below 51% within five years.
“This implies to us that it is unlikely Intel spins/sells a majority of IF for the next 5 years, but still leaves open the possibility of spinning/selling a large minority stake,” the analysts said.
Bank of America projects that Intel’s net leverage will improve by 0.3x–0.4x in 2025 and 2026, reaching 1.5x and 1.2x, respectively. However, free cash flow forecasts were trimmed by $3 billion for 2025 and $2 billion for 2026 to account for the changes in grant accounting.
The analysts characterized the transactions as a “moderate vote of confidence by U.S. and tech companies,” while cautioning that it “does not particularly address concerns about Intel’s longer term competitiveness either within Intel Products … or with execution of Intel Foundry.”
Calling the moves “credit positive,” BofA reiterated its Marketweight rating on Intel bonds and maintained an Overweight view on select long-end bonds.
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