WEBVTT - Deep Dive: Intel Could Sell Stake to US Government 0:00:02.560 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio News. 0:00:08.560 --> 0:00:12.480 The Stock Movers Report, your roundup of companies making moves 0:00:12.480 --> 0:00:15.920 in the stock market, harnessing the power of Bloomberg Data. 0:00:17.040 --> 0:00:20.119 I'm Tim Stadovak along with Carol Masser. Let's take a 0:00:20.160 --> 0:00:21.759 look at some stocks on the move. 0:00:21.960 --> 0:00:25.520 We're talking about Intel, which rallied this on a story 0:00:25.760 --> 0:00:28.520 on how the Trump administration is set to be in 0:00:28.560 --> 0:00:31.720 talks with Intel to have the US government potentially take 0:00:31.760 --> 0:00:34.520 a stake in the company, and this scene as maybe 0:00:34.520 --> 0:00:37.839 helping support Intel' efforts to expand domestic manufacturing. Now, this 0:00:37.920 --> 0:00:41.320 deal would help shore up Intel's planned factory hub and Ohio. 0:00:41.400 --> 0:00:43.879 This is according to people familiar with the plan, who 0:00:44.000 --> 0:00:46.560 said the idea is for the US government to pay 0:00:46.760 --> 0:00:49.720 for the stake. And we know that Intel has been 0:00:49.720 --> 0:00:53.840 going through working on a turnaround, cutting costs, cutting workers, 0:00:53.880 --> 0:00:57.440 cutting jobs and so. And it also comes at a 0:00:57.440 --> 0:01:01.120 time that we know President Trump was critical of the 0:01:01.280 --> 0:01:04.600 CEO of Intel at Bhutan. They had a meeting and 0:01:04.640 --> 0:01:06.480 the President seemed to be more impressed. 0:01:06.720 --> 0:01:08.440 Yeah, we could go tell he was calling for his 0:01:08.480 --> 0:01:10.120 ouster exactly. 0:01:09.880 --> 0:01:12.120 And then changing really's tone. And then we have this 0:01:12.200 --> 0:01:14.760 story again, nothing is a done deal. But this is 0:01:14.800 --> 0:01:16.360 again some of the reporting. 0:01:16.120 --> 0:01:19.520 The story the Byeline Ryan Gould, josh Win Grove, and 0:01:19.640 --> 0:01:23.000 Leanna Baker. Ryan Gould is in here from our deal's team. 0:01:23.040 --> 0:01:24.720 He's deals reporter for Bloomberg News. 0:01:24.760 --> 0:01:28.680 First to say, wait what I mean? Yeah, seriously, what 0:01:29.040 --> 0:01:31.720 a what a time to be alive? I guess you know, 0:01:31.880 --> 0:01:35.800 it's shocking. I mean, it's really it's really a headline. 0:01:35.800 --> 0:01:37.720 It's quite a statement. I think, let's just recap so 0:01:37.880 --> 0:01:39.640 Intel cha has jumped as much as eight percent on 0:01:39.680 --> 0:01:42.720 this headline that the Trump administration is said to be 0:01:42.800 --> 0:01:45.679 discussing taking a stake in Intel. I mean, let's just 0:01:45.720 --> 0:01:49.120 be clear, this is kind of unprecedented. I mean, we 0:01:49.240 --> 0:01:51.080 kind of saw an example with MP materials that you 0:01:51.080 --> 0:01:53.080 guys just talked about them a short while ago. But 0:01:53.160 --> 0:01:55.960 I mean, if you think about how we sort of 0:01:56.040 --> 0:01:58.000 if you're an investment banker or a deal's lawyer and 0:01:58.040 --> 0:01:59.920 you think about, you know, a company that's been in 0:02:00.080 --> 0:02:03.680 trouble and is looking to rebuild, did you think that 0:02:03.720 --> 0:02:05.960 the US government would be a source of outside capital 0:02:06.000 --> 0:02:08.200 to help you, you know, as part of the tool 0:02:08.240 --> 0:02:10.079 kit to help this company we built. I'm not sure 0:02:10.120 --> 0:02:12.880 many people did, and here we are. We're looking at, 0:02:13.040 --> 0:02:15.560 you know, talks that could help Intel rebuild not only 0:02:15.600 --> 0:02:19.040 its manufacturing presence, but toward a specific area, which is 0:02:19.080 --> 0:02:21.760 the Ohio plant that, even under the former CEO of 0:02:21.760 --> 0:02:24.600 Pac Gelsinger, was kind of seen as a very very 0:02:24.680 --> 0:02:26.600 key part of making Intel grate again. 0:02:26.760 --> 0:02:29.280 I thought they were pulling back on the Ohio plant. 0:02:29.320 --> 0:02:32.600 That's what we learned just in recent weeks, recent months, 0:02:32.639 --> 0:02:34.079 from the company's latest report. 0:02:34.440 --> 0:02:36.720 That's true. And I think if you listened to le 0:02:36.840 --> 0:02:40.080 boutin Intel C we visited the White House just days 0:02:40.080 --> 0:02:43.119 ago on the most recent Intel earning score, he made 0:02:43.120 --> 0:02:45.119 it quite clear that this is about sort of right 0:02:45.160 --> 0:02:47.440 sizing the house looking inward. 0:02:48.240 --> 0:02:50.119 So how would a deal like this work. I mean, 0:02:50.240 --> 0:02:52.760 we've spoke to Jim Litinski at MP Materials about the 0:02:52.800 --> 0:02:56.799 Department of Defenses four hundred million dollar investment, and that's 0:02:56.840 --> 0:02:59.720 certainly I feel like Carol, we're referencing that interview all 0:02:59.760 --> 0:03:01.880 the time now, whether we're talking about we grew the 0:03:01.960 --> 0:03:05.560 Industrial policy or we're talking about exactly rare earths. I mean, 0:03:06.160 --> 0:03:07.840 I think the question that I that I have is 0:03:07.880 --> 0:03:10.240 what would an investment from the United States look like, 0:03:10.320 --> 0:03:13.519 what control would they have? And is money enough to 0:03:13.919 --> 0:03:14.880 turn Intel around? 0:03:15.280 --> 0:03:17.280 I think the way to probably best think about this, 0:03:17.400 --> 0:03:19.400 and this is based on some conversations that I've had 0:03:19.440 --> 0:03:21.280 with people who are very in the know. I think 0:03:21.400 --> 0:03:23.440 if you were to be the US government putting in 0:03:23.520 --> 0:03:27.120 an X billion dollar stake or X percent stake into Intel. 0:03:26.919 --> 0:03:28.600 Is an equity, how you think it could be? 0:03:28.720 --> 0:03:30.680 I mean, there's there's every degree we don't know yet, 0:03:30.720 --> 0:03:33.640 we don't yet know. These are very early stages still, 0:03:33.639 --> 0:03:35.720 and you know, it's important to note that the White 0:03:35.720 --> 0:03:38.840 House nor Intel has really commented on the specifics of this. 0:03:38.920 --> 0:03:40.960 I mean Intel went as far to say that they 0:03:40.960 --> 0:03:43.520 are in early stage talks of the government, but I 0:03:43.520 --> 0:03:44.920 mean there are no details here. 0:03:46.440 --> 0:03:50.560 What did you learn about the conversation between President Trump 0:03:51.040 --> 0:03:54.840 and Intel CEO let Bhutan? Because you saw the social 0:03:54.920 --> 0:03:56.960 afterwards right from the president, then the. 0:03:56.920 --> 0:04:00.640 Social before from the President that was really critical of him. 0:04:00.600 --> 0:04:03.600 Very critical right, and then afterwards it was like good conversation, 0:04:03.800 --> 0:04:05.880 interesting background. What happened there. 0:04:06.160 --> 0:04:08.000 I think that's a really I'd love to have been 0:04:08.000 --> 0:04:09.520 a fly on the wall in that room. From what 0:04:09.560 --> 0:04:11.440 I can tell based on people that I've spoken to. 0:04:11.560 --> 0:04:14.320 I think it was a very constructive conversation between the 0:04:14.360 --> 0:04:17.039 two sides. I think there's a lot of respect from 0:04:17.040 --> 0:04:19.520 the President's part as to what Intel is trying to 0:04:19.520 --> 0:04:22.360 do under lipbou Ten. And let's face it, I think 0:04:22.360 --> 0:04:23.960 if you take a step back and think about who 0:04:23.960 --> 0:04:27.960 Liphuten is, he's a very very successful, very accomplished man 0:04:28.200 --> 0:04:31.280 who really understands how semiconductors work. This is a man 0:04:31.320 --> 0:04:34.440 who sat on the board of Intel and understood some 0:04:34.560 --> 0:04:37.320 of the challenges it was facing around manufacturing long before 0:04:37.640 --> 0:04:39.080 these became apparent in our headlines. 0:04:39.160 --> 0:04:41.240 Think about what we were talking about. I wasn't here, Carol, 0:04:41.279 --> 0:04:42.840 but this story came out a week ago. You were 0:04:42.839 --> 0:04:45.440 talking about it on air. This here's the post from 0:04:45.800 --> 0:04:48.800 President Trump just a week ago. Yeah, the CEO of 0:04:48.800 --> 0:04:52.719 Intel is highly conflicted and must resign immediately. There's no 0:04:52.800 --> 0:04:55.280 other solution to this problem. Thank you for your attention 0:04:55.680 --> 0:04:56.280 to this matter. 0:04:56.360 --> 0:04:58.159 That's why I'm curious, like the turnaround and then we 0:04:58.200 --> 0:05:00.560 saw it after the meeting. So if it take ten 0:05:00.640 --> 0:05:04.360 steps to get this done, where are we in that process? 0:05:04.640 --> 0:05:06.839 If indeed this happens, But where would you say we 0:05:06.839 --> 0:05:09.600 are we on step one? Step two step point five. 0:05:10.040 --> 0:05:11.839 I think just given that, and you know you mentioned 0:05:11.839 --> 0:05:14.840 the truth social posts that the President made, there were 0:05:14.839 --> 0:05:17.560 conversations that were going to happen this week with commerce, 0:05:17.640 --> 0:05:20.400 with Treasury. I mean, Scott Bessett was here yesterday. He's 0:05:20.440 --> 0:05:23.159 involved in these conversations. How lut naked commerce is involved 0:05:23.160 --> 0:05:26.160 in these conversations. This is a government wide discussion. 0:05:26.440 --> 0:05:29.360 So is it three steps in four steps in now? 0:05:29.480 --> 0:05:31.400 I think it's really hard to tell. I think based 0:05:31.440 --> 0:05:33.440 on where we're at, and you know, I think Intel 0:05:33.520 --> 0:05:36.760 says it's early stage. I think it's probably towards the beginning. 0:05:36.880 --> 0:05:39.679 Do you investors, I'm stuck on this line in your story, 0:05:39.800 --> 0:05:42.800 the move turned conventional wisdom on its head among investors, analyst, 0:05:42.839 --> 0:05:45.880 industry executives, and even longtime government officials in terms of 0:05:45.920 --> 0:05:48.800 how private industry has dealt with the government. That's with 0:05:49.000 --> 0:05:52.040 regard to MP materials in investment. Do we need to 0:05:52.120 --> 0:05:54.719 understand and to do investors need to understand that this 0:05:54.760 --> 0:05:56.960 is a new era when it comes to government involvement 0:05:57.000 --> 0:05:58.000 in companies. 0:05:57.839 --> 0:06:00.240 For sure, without a doubt, because this is not just 0:06:00.320 --> 0:06:03.320 MP materials, this is US steel. Yeah, to think about 0:06:03.360 --> 0:06:05.520 what they got pointed in the Golden Shore and US steel. 0:06:05.720 --> 0:06:09.000 This is a new age for investment in private industry. 0:06:09.040 --> 0:06:10.839 I want to say private industry. I've just been outside 0:06:10.880 --> 0:06:13.320 government and I think this is where he is. 0:06:13.400 --> 0:06:18.279 It's a witness this stock Moovers report from Bloomberg Radio. 0:06:18.760 --> 0:06:20.920 Check back with us throughout the day for the latest 0:06:21.000 --> 0:06:24.159 roundup of companies making news on Wall Street and for 0:06:24.279 --> 0:06:28.200 the latest market moving headlines. Listen to Bloomberg Radio Live, 0:06:28.600 --> 0:06:32.200 catch us on YouTube, Bloomberg dot com, and on Applecarplay 0:06:32.240 --> 0:06:34.839 and Android Auto with the Bloomberg Business app.