The United States government is taking an unusual step by acquiring a roughly 10% stake in Intel (Nasdaq: INTC) through an $8.9 billion investment in the chipmaker’s common stock, according to announcements made on Friday. This move, confirmed by both Intel and President Trump, marks a significant intervention by the federal government into the American semiconductor industry at a time when Intel faces intense challenges in the global market.
President Trump, in a post on his social platform Truth Social, described the government’s new position as having full ownership and control of 10% of Intel, which he referred to as “a Great American Company that has an even more incredible future.” Interestingly, Trump revealed that the idea originated during a recent Oval Office meeting with Intel’s CEO Lip-Bu Tan. Trump recounted telling Tan, “I think you should pay us 10% of your company,” to which the CEO agreed, sealing an agreement that surprised many observers given the company’s troubled recent history.
The $8.9 billion investment comes largely from funds previously allocated through the CHIPS and Science Act of 2022, along with the Secure Enclave program, which focuses on trusted semiconductor manufacturing for defense purposes. About $5.7 billion of the investment is from grants already awarded to Intel but not yet disbursed, and another $3.2 billion comes from the Secure Enclave funds. This means the government is not introducing new funds out of pocket but converting those grants and program funds into equity in the company. Intel’s own statements emphasized that the government’s stake will be passive, with no board representation or governance rights, and a commitment by the government to vote in line with Intel’s board except for limited cases.
This infusion provides a much-needed capital boost to Intel, which has struggled in recent years to keep up with competitors like Nvidia and AMD, while also battling issues related to leadership stability and supply chain challenges. CEO Lip-Bu Tan, who took the helm just over five months ago, was previously criticized by President Trump for his past connections to Chinese companies, which led to security concerns raised by lawmakers. Trump had even publicly called for Tan’s resignation earlier this month. However, following their latest meeting, Trump expressed a more conciliatory tone, suggesting the deal was beneficial for both the company and the country: “He came in hoping to keep his job, and he ultimately provided us with $10 billion for the United States,” Trump stated.
The price per share for this transaction was set at $20.47, which is approximately $4 less than Intel’s closing market price of $24.80 on the day of the deal’s announcement. The government is purchasing 433.3 million shares of non-voting stock, making it one of Intel’s largest shareholders. Despite the discount, analysts noted the government’s move could be seen as a vote of confidence in Intel’s future prospects. Following the announcement, Intel’s shares initially rose by about 5.5% during trading, with an additional modest increase after hours.
This development fits into a broader industrial strategy focused on strengthening semiconductor manufacturing capabilities within the United States, a sector deemed crucial for national security and economic leadership. Intel, with its capacity for advanced chip production on American soil, is central to this strategy. Lip-Bu Tan underlined this point in Intel’s official statement, reaffirming the company’s commitment to making the most advanced chips domestically and reiterating its ongoing obligations under the Secure Enclave program to the U.S. Department of Defense.
The effort is also notable for signaling a shift in how the U.S. government interacts with private industry. Using grant funds from earlier legislation to take an equity stake is a distinct approach that underscores the government’s intention to safeguard its investments while securing more influence in key technological sectors. Commerce Secretary Howard Lutnick expressed support for the deal, emphasizing that the government should receive equity in return for its financial support.
The timing of the investment also comes shortly after another major investor, Japan’s SoftBank Group, increased its stake in Intel to around 2%, highlighting a growing international interest in the company’s turnaround efforts.opb+1
While the government’s position is clearly defined as passive, this unique arrangement may set a precedent for future engagements with other companies in strategic industries. President Trump hinted at ambitions to negotiate similar equity deals, signaling a more assertive posture in managing federal investments to support American businesses.
