The U.S. government’s plan to take a stake in Intel Corp. could have “adverse consequences,” the chipmaker warned today.

The company detailed the potential business risks in a filing with the U.S. Securities and Exchange Commission.

Last year, Intel won more than $7.8 billion in federal funding under the CHIPS Act. It also secured $3.2 billion worth of grants to participate in a program called Secure Enclave. The initiative will see Intel use its fabs to make chips for the U.S. Defense Department.

On Friday, Intel agreed to provide the U.S. government with common stock shares in exchange for the federal funding that it’s slated to receive. The deal covers both the CHIPS Act and Secure Enclave grants the company won last year. The U.S. government is taking a 10% stake in Intel, which will make it the company’s largest investor.

The chipmaker stated last week that the stake doesn’t come with a board seat. Intel said that the U.S. Commerce Department, which will own the shares, plans to “vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.” Today’s regulatory filing sheds additional light on those exceptions.

According to the document, the Commerce Department may vote against business moves that would limit Intel’s ability to comply with the terms of the government’s investment. One of the deal clauses specifies that the government may purchase an additional 5% stake in the company within five years. The clause will activate only if Intel sells a majority stake in its fab business.

The chipmaker cautioned in the regulatory filing that the government investment could lead “adverse reactions” from customers, suppliers and other business partners. CNBC reported that Intel generates more than three-quarters of its revenue from customers outside the U.S. The company’s supplier network, in turn, includes multiple international chipmaking equipment makers.

“There may also be litigation related to the transaction,” the filing added. On Friday, the New York Times cited multiple lawyers and bankers as saying that the CHIPS Act may not allow the White House to take a stake in chipmakers that receive federal funding. That could potentially cause legal complications for Intel.

“Any of the foregoing could have a material adverse effect on the Company’s revenue, operations, financial position, cash flows, access to financing, cost structure, competitiveness, reputation, profitability, and prospects,” Intel stated in the filing.

The company will use the government financing to grow its stateside manufacturing capacity. Intel is building new fabs in Arizona and Ohio, while a number of its existing manufacturing sites are set to receive upgrades. The project is expected to cost more than $100 billion over several years.

Photo: Intel