President Donald Trump announced on August 22, that Intel Corporation has agreed to provide the U.S. government with a 10% equity stake, valued at approximately $10.5 billion based on the company’s current market capitalization of $103 billion, as part of a deal to bolster domestic semiconductor manufacturing.
Speaking to reporters, Trump described the agreement as a “great deal” for Intel, which has struggled to compete with rivals like Nvidia and AMD in advanced chip production, per Reuters.
The deal involves converting a portion of Intel’s $10.9 billion in CHIPS and Science Act grants—originally awarded under the Biden administration—into equity, a move confirmed by Commerce Secretary Howard Lutnick, who emphasized the need to reduce U.S. reliance on foreign chipmakers like Taiwan’s TSMC, located 80 miles from China, per CNBC.
Background and Negotiations
The agreement follows discussions prompted by Trump’s initial call for Intel CEO Lip-Bu Tan to resign over concerns raised by Sen. Tom Cotton (R-Ark.) about Tan’s investments in Chinese semiconductor firms and his prior role at Cadence Design Systems, which pleaded guilty to violating export controls, per The New York Times.
After meeting with Tan at the White House, Trump expressed a favorable view, stating, “I liked him a lot,” and proposed the equity stake to ensure taxpayer benefits from federal investments.
The deal, which requires Intel board approval and could face shareholder scrutiny, has drawn mixed reactions.
Sen. Bernie Sanders (I-Vt.) supported the move, arguing that taxpayers deserve returns on CHIPS Act funds, while Sen. Rand Paul (R-Ky.) criticized it as a “step toward socialism” on X, questioning government ownership in private companies, per The Hill.
Intel’s stock rose over 6% on the news, following a $2 billion investment from SoftBank, per Bloomberg.
Strategic Implications and Challenges
The non-voting stake, as clarified by Lutnick, aims to support Intel’s efforts to expand U.S. facilities, including its delayed “Silicon Heartland” project in Ohio, without granting governance rights, per NPR.
The CHIPS Act, passed in 2022 with $52.7 billion to revitalize U.S. chipmaking, has allocated $7.86 billion in grants and $3 billion for Intel’s national security projects, with $2.2 billion already disbursed, per Intel’s SEC filings.
The deal aligns with Trump’s strategy to secure domestic supply chains, though analysts note Intel’s challenges in securing foundry customers and competing in the AI chip market, per PBS News. No official announcement from Intel or the White House has detailed the final terms, and the proposal remains subject to ongoing negotiations.
