The US government will buy 10% of Intel shares after President Donald Trump reached an agreement to convert $8.9 billion in grants under the Chips Act 2022 into shares in the company. The decision makes Washington Intel's largest shareholder and begins a new phase of direct state intervention by the US government in private business, The Wall Street Journal reports.
The deal sees the US government receive shares at $20.47 apiece, below the market price ($24.80 at the close of trading on Friday) and even cheaper than the $23 SoftBank recently paid in a separate $2 billion investment. If Intel reduces its stake in chip manufacturing below 51%, the government will be able to buy another 5% of the shares at the same price.
Just two weeks ago, Trump sharply criticized Intel CEO Lip-Bu Tan for his ties to China and called for his resignation. But after a meeting in Washington, the president changed his position: "I said, 'I think you should give us 10% of the company,' and they agreed," Trump said.
Intel, once the leading U.S. chipmaker, is now lagging behind rivals such as TSMC, NVIDIA and AMD. Its foundry division lost $3.2 billion last quarter. Analysts say the government investment is designed to ensure that semiconductor manufacturing in the U.S. remains a strategic resource.
"This is unprecedented government intervention in a company that is not on the verge of collapse," said Gautam Mukunda of the Yale School of Management.
Since his re-election, Trump has increasingly intervened in the commercial sector. He has already agreed to a 15% cut on the sale of NVIDIA and AMD AI chips to China, received a "golden share" in US Steel after its acquisition by Nippon Steel, and pressured large corporations through executive orders and lawsuits.
Senator Rand Paul (R-Kentucky) criticized the plan, calling it "a step towards socialism." At the same time, Trump assured that this is just the beginning: "We will make even more deals like this."
Intel shares rose 5.5% on Friday, but are still half the price of a year ago. The company's current market capitalization is about $110 billion.
Analysts remain cautious: "Intel needs technological capabilities first and foremost, not money from the government," Stacy Rasgon of Bernstein Research emphasized.
Although the government will not get a seat on the board, Washington's influence over Intel's future will be significantly increased. For Trump, this deal is not only an economic but also a political project aimed at reviving American manufacturing.
"Intel is behind, but we won't let it disappear," Trump said.