The US government is officially investing in Intel, a remarkable development and a rare example of the government getting financially involved in a private company.
Under the terms of the deal, the US is investing $8.9 billion into the chipmaker, “reflecting the confidence the Administration has in Intel to advance key national priorities and the critically important role the company plays in expanding the domestic semiconductor industry,” the chipmaker said in a Friday announcement.
The agreement means the US government will hold a 9.9% stake in Intel.
“The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion,” Intel said.
“Under the terms of today’s announcement, the government agrees to purchase 433.3 million primary shares of Intel common stock at a price of $20.47 per share, equivalent to a 9.9% stake in the company,” Intel added. “This investment provides American taxpayers with a discount to the current market price while enabling the US and existing shareholders to benefit from Intel’s long-term business success.”
Earlier on Friday, President Donald Trump talked about the agreement and his discussions with Intel CEO Lip-Bu Tan. Intel’s stock soared following the remarks, finishing the trading day up nearly 6%. The stock was trading down around 1% in after-hours trading following Intel’s confirmation of a deal.
“The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights,” Intel said in its announcement. “The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.”
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A struggling American tech giant whose CEO came under political scrutiny
picture alliance/dpa/picture alliance via Getty Images
Intel has seen its market share decline as foreign rivals like the Taiwan Semiconductor Manufacturing Company grow.
The company is attempting a turnaround, and its CEO recently found himself caught up in political crosshairs.
Trump met with Intel’s CEO earlier this month at the White House after calling for Tan’s “immediate” resignation due to his reported investments in Chinese companies. Following the meeting, Trump sounded a much different tone, praising Tan’s “amazing story.”
Trump talked about some of his recent deal discussions with Tan in his White House remarks on Friday.
“I said, you know what, I think the United States should be given 10% of Intel,” Trump said. “And he said, I would consider that. I said, well, I’d like you to do that because Intel’s been left behind as, you know, compared to Jensen.”
“I said I think it would be good having the United States as your partner. He agreed. And they’ve agreed to do it, and I think it’s a great deal for them, and I think it’s a great deal,” Trump added.
“He walked in wanting to keep his job, and he wound up giving us $10 billion to the United States. So we picked up $10 billion,” Trump said. “And we do a lot of deals like that. I’ll do more of them.”
Earlier in the week, Treasury Secretary Scott Bessent said that the US would not use any stake in Intel to pressure companies.
“Yeah, the last thing we’re going to do is put pressure, is to take a stake and then try to drum up business,” Bessent said during an interview on CNBC.
Trump has repeatedly criticized the bipartisan CHIPS and Science Act, but like his predecessor, he wants to increase the share of semiconductors made in the US.
“A revitalized US chip industry will generate thousands of high-paying jobs, reinforce our technological leadership, and protect our supply chains from disruption by foreign rivals,” reads Trump’s AI Action Plan, which was published last month.
Semiconductors are difficult to manufacture, especially the more advanced a chip becomes. Still, they are a major component in everything from smartphones to AI. Global chip shortages, exacerbated by the COVID-19 pandemic, heightened concerns that the US is too reliant on foreign production for the cornerstone of modern technology. Intel is one of just a handful of US companies that both manufactures and designs chips.
The US taking a stake in Intel illustrates the White House’s growing support for aggressive intervention into the private sector. The US holds a so-called “golden share” in United States Steel Corp, and the Pentagon announced in July that it would take a $400 million preferred equity stake in MP Materials Corp, a US-based rare earth producer.
“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the US, Intel is deeply committed to ensuring the world’s most advanced technologies are American-made,” Intel CEO Tan said in the Friday announcement.
