25/08/2025

BIZ & FINANCE MONDAY | AUG 25, 2025

17

American govt to take 10% equity stake in Intel

German, French post offices restrict packages to US BERLIN: The postal services of Germany and France last week announced a raft of restrictions on package deliveries to the United States due to tariffs imposed by President Donald Trump. DHL, which owns the Deutsche Post service, said that from Saturday it would “temporarily suspend” its standard category of US package delivery, the preferred option for many small businesses. “The reason for the restrictions, which we expect to be temporary, are new processes for postal delivery which have been put in place by US authorities,” DHL said in a statement. “Important questions have not yet been answered, including who will have to pay the tariffs and how.” France’s La Poste told AFP it would suspend from today package deliveries to the United States, except for gifts sent by individuals with a value of less than €100 (RM490). In a statement, it said the new rules had been issued only on Aug 15, “leaving European postal services with an extremely limited timeframe to get prepared. “Moreover, their related documentation still requires further clarification.” Each year the French service sends 1.6 million packages on average to the US, 80% from businesses and 20% from individuals. Other European postal services, including in Belgium, Austria and Denmark, have already taken similar measures. DHL said a more expensive “express” service for packages weighing up to 70kg would still be available. Individual customers will also still be able to send items as presents with a maximum value of US$100 but DHL warned that these would be subject to extra checks to prevent the service being used for commercial goods. In July, the Trump administration said that as of Aug 29 it would abolish a tax exemption on small packages entering the US. Such packages with a value of less than US$800 will now be taxed at 15%. – AFP US protectionism threatens agricultural ties: China envoy WASHINGTON: US protectionism is undermining agricultural cooperation with China, Beijing’s ambassador to Washington said, warning that farmers should not bear the price of the trade war between the world’s two largest economies. “It goes without saying that protectionism is rampant, casting a shadow over China-US agricultural cooperation,” said Xie Feng, according to the transcript of a speech published by the Chinese embassy on Saturday. Agriculture has emerged as a major point of contention between China and the US as the superpowers are locked in a tariff war launched by President Donald Trump. China in March slapped levies of up to 15% on US$21 billion (RM89 billion) worth of American agricultural and food products in retaliation for sweeping US tariffs. Washington and Beijing this month extended a truce for 90 days, staving off triple-digit duties on each other’s goods. US agricultural exports to China fell 53% in the first half of the year from the same period in 2024, with a 51% decline in soybeans, Xie said in the speech to a soybean industry event in Washington on Friday. “American farmers, like their Chinese counterparts, are hardworking and humble,” Xie said. “Agriculture should not be hijacked by politics, and farmers should not be made to pay the price of a trade war.” – AFP

from the government, singling out Intel’s contract chip manufacturing business, known as its foundry unit. “Without government support or another financially stronger partner, it will be difficult for the Intel foundry unit to raise enough capital to continue to build out more Fabs at a reasonable rate,” he said. Intel “needs to catch up with TSMC from a technological perspective to attract business”, he added. The government’s stake is to be passive ownership and does not include a board seat, Intel said. The government will be required to vote with Intel’s board when shareholder approval is necessary, with “limited exceptions.” Intel did not specify the exceptions. The equity stake also includes a five-year warrant at US$20 a share for an additional 5% of Intel stock, which the US can use if Intel loses control of the foundry business. Federal backing could give Intel more breathing room to revive its loss-making foundry business, analysts said, but it ceded the AI market to Nvidia and has lost market share to Advanced Micro Devices in its central processor business for several years. It has also faced challenges in attracting customers to its new factories. Tan, who became CEO in March, has been tasked to turn around the American chipmaking icon, which recorded an annual loss of US$18.8 billion in 2024 – its first such loss since 1986. The company’s last fiscal year of positive adjusted free cash flow was 2021. – Reuters

House official said. That followed Trump’s Aug 11 meeting with the Intel CEO after Trump demanded that Tan resign over his ties to Chinese firms. “He walked in wanting to keep his job and he ended up giving us US$10 billion for the United States. So we picked up US$10 billion,” Trump said on Friday. Commerce Secretary Howard Lutnick said on X that Tan had struck a deal “that’s fair to Intel and fair to the American people”. The Intel investment marks the latest unusual deal with American companies, including a US government agreement allowing AI chip giant Nvidia to sell its H20 chips to China in exchange for receiving 15% of those sales. Other recent deals include an agreement for the Pentagon to become the largest shareholder in a small mining company, MP Materials, to boost output of rare earth magnets and the US government’s winning a “golden share” with certain veto rights as part of a deal to allow Japan’s Nippon Steel to buy US Steel. The federal government’s broad intervention in corporate matters has worried critics, who say Trump’s actions create new categories of corporate risk. Ahead of the US deal with Intel, Japan’s SoftBank agreed to take a US$2 billion stake in the chip maker on Monday. Some industry observers still question Intel’s ability to surmount its problems.

WASHINGTON: President Donald Trump said last week the US would take a 10% stake in Intel under a deal with the struggling chipmaker that converts government grants into an equity share, the latest extraordinary intervention by the White House in corporate America. The deal puts Trump on better terms with Intel CEO Lip-Bu Tan, after the president recently said the CEO should step down due to conflicts of interest. It will ensure that the chipmaker will receive about US$10 billion in funds for building or expanding factories in the US. Under the agreement, the US will purchase a 9.9% stake in Intel for US$8.9 billion, or US$20.47 per share, which represents a discount of about US$4 from Intel’s closing share price of US$24.80 on Friday. The purchase of the 433.3 million Intel shares will be made with funding from the US$5.7 billion in unpaid grants from the Biden-era CHIPS Act and US$3.2 billion awarded to Intel for the Secure Enclave programme, also awarded under Trump’s predecessor, Democratic President Joe Biden. o Trump’s intervention in private sector raises concerns WASHINGTON: US Federal Reserve chairman Jerome Powell left the door open to interest rate cuts in a keenly watched speech last week, balancing risks to the economy as President Donald Trump intensifies pressure on the central bank. Last year, the Fed chair used his keynote speech at the Jackson Hole Economic Policy Symposium to indicate the time had come for interest rate cuts. This time, however, the picture is murkier. Powell faces constant attacks from Trump – who is aggressively pushing the independent bank to slash rates – alongside mixed economic data leading him towards a cautious approach. Powell warned on Friday that the risks of higher inflation and a weakening jobs market add up to a “challenging situation.” “Downside risks to employment are rising,” Powell said in his speech, warning that these challenges could materialise quickly in the form of layoffs. “While the labour market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers.” He added that “the effects of tariffs on consumer prices are now clearly visible” and expected to accumulate over the coming months. He said there is high uncertainty about the timing and extent of the tariffs’ impact. But he vowed: “We will not allow a one-time increase in the price level to become an ongoing inflation problem.” Confronted with these dual challenges, Powell alluded to a possible rate cut:“With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” Asked about Powell’s remarks on Friday, Trump told reporters: “We call him ‘Too Late’ for a reason.” The president said Powell should have cut rates a year ago. This marked Powell’s final Jackson Hole

Intel stock rose roughly 1% in the extended session on Friday after closing up 5.5% during regular trading. Trump met with Tan on Friday, a White Fed chairman opens door to rate cut Daniel Morgan, senior portfolio manager at Synovus Trust, said Intel’s problems are beyond a cash infusion from SoftBank or equity interest

Traders working on the floor of the New York Stock Exchange. Stocks on Wall Street rallied after Powell’s speech. – AFPPIC

Treasury yields, which are sensitive to monetary policy developments, pulled back. CME Group’s FedWatch Tool showed that the market sees a roughly 85% chance of a September rate cut. But Ryan Sweet, chief US economist at Oxford Economics, said the next rate reduction might not be “the beginning of a series.” “Powell stressed that policy isn’t on a preset course and will continue to be based on the incoming data and the balance of risks.” The Fed chair appears to be setting the stage for a “gradual approach” to adjusting rates, he added. – AFP

speech at the helm of the Fed, with his term as chair ending in May 2026. “That’s about as clear cut as Powell can get”in signaling that he leans towards a September rate cut, said Navy Federal Credit Union chief economist Heather Long. “While he is committed to ensuring that the tariff shocks are a one-time impact on inflation, he is telegraphing that the jobs situation is deteriorating quickly and that is the biggest risk now,” she added in a note. Wall Street rallied on Friday after Powell’s remarks, with both the Dow and Nasdaq climbing around 2%.