Key points
- The Trump administration is negotiating a 10% stake in Intel in exchange for converting government grants.
- Deal aims to boost domestic chip production and reduce reliance on foreign suppliers.
- Government would become one of Intel’s largest shareholders, blurring public-private lines.
- This follows Trump’s earlier call for Intel CEO’s resignation, later retracted. Deal’s precedent exists, though unusual, citing the 2008 GM bailout.
The Trump administration is pursuing a significant stake in Intel Corporation, proposing a deal that would see the U.S. government acquire a 10% ownership share in exchange for converting previously allocated government grants. This move, if successful, would dramatically increase government involvement in the private sector and significantly reshape the landscape of the American semiconductor industry.
The administration frames the deal as a strategic investment designed to bolster domestic chip production and reduce the nation’s dependence on foreign manufacturers, particularly in the context of the ongoing technological competition with China.
The proposed deal follows a tumultuous period for Intel, including President Trump’s initial call for the resignation of Intel CEO Lip-Bu Tan, fueled by concerns about Tan’s past investments in Chinese technology companies. However, after a meeting with President Trump and a public affirmation of his loyalty to the United States, the President withdrew his demand.
The current proposal now appears to represent a significant shift in the administration’s approach to Intel, moving from demanding executive changes to securing a substantial financial interest.
The administration’s rationale centers on leveraging the government’s investment under the CHIPS and Science Act to gain a controlling stake in the company, arguing that this would be a more beneficial use of taxpayer dollars than simply providing grants.
Commerce Secretary Howard Lutnick described the original grants as a “giveaway,” advocating for the stock acquisition as a far more advantageous outcome for the U.S. government. Intel, facing significant financial challenges in recent years, including substantial losses, might be more amenable to the deal given its current precarious financial position.
While unusual, government investment in major corporations is not unprecedented. The 2008 General Motors bailout, where the government secured a large stake in the automaker to prevent bankruptcy, serves as a notable example. However, the long-term financial implications of that intervention remain a subject of debate.
The administration assures that the government intends to hold non-voting shares, preventing direct interference in Intel’s operations; however, analysts remain concerned about potential indirect influence on the company’s decisions and the possibility of this deal setting a precedent for future government interventions in the tech sector.
