WASHINGTON: President Donald Trump said on Friday (Aug 22) the US would take a 10 per cent stake in Intel INTC.O under a deal with the struggling chipmaker and is planning more such moves, the latest extraordinary intervention by the White House in corporate America.
An official announcement on the arrangement is expected later in the day, a source familiar with the matter said. Trump is set to meet with CEO Lip-Bu Tan later on Friday, a White House official said.
The development follows a meeting between Tan and Trump earlier this month that was sparked by Trump’s demand for the Intel chief’s resignation over his ties to Chinese firms.
“He walked in wanting to keep his job, and he ended up giving us $10 billion for the United States. So we picked up $10 billion,” Trump said on Friday.
Commerce Secretary Howard Lutnick said on X that the deal had been completed. “The United States of America now owns 10 per rent of Intel,” he wrote, saying Tan had struck a deal “that’s fair to Intel and fair to the American People.”
While Trump did not provide details on the $10 billion, the equity stake is about equal to the amount Intel is set to receive in CHIPS Act grants from the government to help fund the building of chip plants in the US.
The Intel investment would be the latest of several unusual deals with US companies, including agreeing to allow AI chip giant Nvidia NVDA.O to sell its H20 chips to China in exchange for the US government receiving 15 per cent of those sales.
The Pentagon is also slated to become the largest shareholder in a small mining company to boost the output of rare earth magnets, and the US government negotiated for itself a “golden share” with certain veto rights as part of a deal to allow Nippon Steel to buy US Steel.
The US government’s broad intervention in corporate matters has worried critics who say Trump’s actions create new categories of corporate risk.
Officials previously told Reuters the Trump administration wanted to convert $7.9 billion in cash grants approved by the administration of President Joe Biden for Intel to build chip plants in the United States to an equity stake in the company.
On Thursday, a White House official said the administration was not seeking equity stakes from companies like TSMC or Micron that have boosted their US investment plans.
INTEL “NEEDS TO CATCH UP WITH TSMC”
Synovus Trust Senior Portfolio Manager Daniel Morgan said Intel’s problems are beyond a cash infusion from SoftBank or equity interest from the government.
“Without government support or another financially stronger partner, it will be difficult for Intel’s foundry unit to raise enough capital to continue to build out more Fabs at a reasonable rate,” he said, adding that Intel “needs to catch up with TSMC from a technological perspective to attract business.”
A 10 per cent stake at current share prices would be worth roughly $10 billion. Lutnick said this week any stake would be non-voting, meaning it would not enable the US government to tell the company how to run its business.
Intel, whose shares closed up 5.5 per cent at $24.80, declined to comment.
The move follows a $2 billion capital injection from SoftBank Group 9984.T in what was a major vote of confidence for the troubled US chipmaker in the middle of a turnaround.
Federal backing could give Intel more breathing room to revive its loss-making foundry business, analysts said, but it still suffers from a weak product roadmap and challenges in attracting customers to its new factories.
Trump, who met with Intel CEO Lip-Bu Tan on August 11, has taken an unprecedented approach to national security.
The US president has pushed for multibillion-dollar government tie-ups in semiconductors and rare earths, such as a pay-for-play deal with Nvidia NVDA.O and an arrangement with rare-earth producer MP Materials MP.N, to secure critical minerals.
Tan, who took the job at Intel in March, has been tasked to turn around the US chipmaking icon, which recorded an annual loss of $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.
