{"id":608012,"date":"2025-08-23T08:17:30","date_gmt":"2025-08-23T06:17:30","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=608012"},"modified":"2025-08-23T08:50:00","modified_gmt":"2025-08-23T06:50:00","slug":"us-government-gets-big-stake-in-intel","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/business\/608012-us-government-gets-big-stake-in-intel.html","title":{"rendered":"US government gets big stake in Intel"},"content":{"rendered":"\n

President Donald Trump sealed a deal that gives the US government a nearly 10% stake in Intel Corp., part of an unconventional bid to reinvigorate the beleaguered company and boost domestic chip manufacturing.<\/p>\n\n\n\n

Under the agreement, the US will receive 433.3 million shares of common stock \u2014 representing 9.9% of the fully diluted common shares in Intel \u2014 according to a statement from the company. <\/p>\n\n\n\n

The $8.9 billion investment will be funded by grants from the US Chips and Science Act and Secure Enclave program that had previously been extended but not yet paid, Intel said, confirming a report by Bloomberg News.<\/p>\n\n\n\n

Together with the $2.2 billion in Chips Act money that Intel already received, the investment totalled $11.1 billion. <\/p>\n\n\n\n

The government will be a passive owner, with no board seat or other governance or information rights, Intel said.<\/p>\n\n\n\n

\u201cWe are grateful for the confidence the president and the administration have placed in Intel, and we look forward to working to advance US technology and manufacturing leadership,\u201d Intel chief executive officer Lip-Bu Tan said in the statement.\u00a0<\/p>\n\n\n\n

Intel shares rose 5.5% to $24.80 at the close in New York on Friday. They slipped about 1% in choppy postmarket trading after the deal was finalised.<\/p>\n\n\n\n

In a social media post, Trump described the transaction as a \u201cgreat Deal for America and, also, a great Deal for INTEL.\u201d<\/p>\n\n\n\n

\u201cBuilding leading-edge semiconductors and chips, which is what Intel does, is fundamental to the future of our Nation,\u201d he said.<\/p>\n\n\n\n

The US taking partial ownership marks a stunning level of intervention in an American company, cutting against the principles of free-market capitalism that investors and policymakers have long considered sacrosanct except in the most extraordinary situations, such as war or a systemic economic crisis.<\/p>\n\n\n\n

The administration considers it an extraordinary and unique situation \u2014 and sees semiconductor production as a matter of national security, a White House official said. <\/p>\n\n\n\n

\"\"
US President Donald Trump speaks in the Oval Office of the White House in Washington, DC, US, on Friday, Aug. 22, 2025. Photographer: Annabelle Gordon\/UPI\/Bloomberg<\/figcaption><\/figure>\n\n\n\n

Intel is one of a small number of American companies capable of making chips at scale on domestic soil, the official said, and the administration looks to avoid shortages like those in recent years that rattled US supply chains.\u00a0<\/p>\n\n\n\n

Though the administration telegraphed its intentions with Intel in recent weeks, the move creates untold risks that could distort markets and the flow of capital as well as lead to massive taxpayer losses. <\/p>\n\n\n\n

But the government\u2019s bet could also pay off in a major way for a onetime industry pioneer. Intel has faced a turbulent stretch with investors worried it is losing its technological edge and falling too far behind competitors.\u00a0<\/p>\n\n\n\n

The approach represents a new way for Trump to wield Chips Act funding, after long assailing the law signed by his predecessor, former President Joe Biden. <\/p>\n\n\n\n

Trump has said the law\u2019s subsidies for semiconductor manufacturers didn\u2019t provide any return for US taxpayers. Intel was already poised to be the biggest beneficiary of money from the Chips Act.<\/p>\n\n\n\n

As part of the pact, the government will receive a five-year warrant \u2014 at $20 per share for an additional 5% of common stock \u2014 that\u2019s only exercisable if Intel ceases to own at least 51% of its chip-manufacturing business. PJT Partners served as Intel\u2019s financial adviser on the transaction.<\/p>\n\n\n\n

Santa Clara, California-based Intel touted its more than $100 billion effort to expand manufacturing in the US and its new factory in Arizona, which is set to begin high-volume production this year. <\/p>\n\n\n\n

But it didn\u2019t discuss a facility planned for Ohio that has been repeatedly delayed.\u00a0<\/p>\n\n\n\n

The deal represents a dramatic reversal from earlier this month, when Trump called for Tan\u2019s ouster and accused him of being \u201chighly conflicted\u201d because of concerns over his earlier ties to China. <\/p>\n\n\n\n

Those remarks prompted the sit-down between the president and the Intel CEO, laying the groundwork for Friday\u2019s deal.<\/p>\n\n\n\n

\u201cI said, \u2018You know what? I think the United States should be given 10% of Intel,\u2019 and he said, \u2018I would consider that,\u2019 and I said, \u2018Well, I\u2019d like you to do that,\u2019\u201d Trump said of his discussion with Tan.<\/p>\n\n\n\n

More government tie-ins possible<\/h2>\n\n\n\n
\"\"
Lip-Bu Tan, chief executive officer of Intel Corp., departs following a meeting at the White House in Washington, DC, US, on Monday, Aug. 11, 2025. Photographer: Alex Wroblewski\/Bloomberg<\/figcaption><\/figure>\n\n\n\n

Commerce Secretary Howard Lutnick has signalled that Trump wants to see more direct benefits to the US from funding key companies instead of just giving away grants. <\/p>\n\n\n\n

Lutnick worked to finalise the details of the agreement since Tan and Trump\u2019s meeting.<\/p>\n\n\n\n

While the White House has cast the Intel deal as a possible template for other companies, they haven\u2019t said which ones it may be having similar discussions with. <\/p>\n\n\n\n

A US official, however, said that companies that are boosting US investment pledges, including Taiwan Semiconductor Manufacturing Co. and Micron Technology Inc., will not be pressured to offer equity in exchange for funding.<\/p>\n\n\n\n

The fresh infusion of nearly $9 billion instantly boosts growth prospects for the company. <\/p>\n\n\n\n

It also opens the door to partnerships that could be critical in developing new intellectual property and technology, areas where Intel has lagged in recent years.<\/p>\n\n\n\n

Still, in order for government ownership to boost Intel, Trump will have to do more than just take a stake. Wall Street analysts don\u2019t expect money alone to turn around the company, which has suffered from years of declining sales and market share. <\/p>\n\n\n\n

But there is a possibility that pressure from Trump will help line up more clients for Intel\u2019s production arm, potentially justifying the cost of expanding domestic manufacturing.\u00a0<\/p>\n\n\n\n

\u201cTrump kind of becomes your salesman,\u201d said Dan Morgan, a senior portfolio manager at Synovus Trust who has covered the company since the 1990s.<\/p>\n\n\n\n

Lining up more Intel clients might be a tough sell for Trump. The company\u2019s chip-manufacturing arm is widely considered inferior to rivals and it still must build new cutting-edge facilities. <\/p>\n\n\n\n

\u201cBeside money, Intel needs customers,\u201d Bernstein analyst Stacy Rasgon said in a note to clients. \u201cFunding a buildout with no customers probably won\u2019t end well for shareholders, of whom the US government would be the largest under this situation,\u201d he said.<\/p>\n\n\n\n

In its statement, Intel said it was \u201cdeeply engaged\u201d with current and potential clients and partners that could help build up the US chip supply chain. Microsoft Corp., Dell Technologies Inc., HP Inc. and Amazon.com Inc.\u2019s AWS all pledged support as part of the announcement. <\/p>\n\n\n\n

\u201cThe industry needs a strong and resilient US semiconductor industry, and no company is more important to this mission than Intel,\u201d Michael Dell, CEO of the namesake computer maker, said in the statement. <\/p>\n\n\n\n

The Intel deal exemplifies how Trump has embraced a new brand of economic statecraft in his second term, as he looks to bolster domestic manufacturing, rebalance trade ties and ensure American dominance in critical sectors.<\/p>\n\n\n\n

Trump in early August announced a legally questionable arrangement with Nvidia Corp. and Advanced Micro Devices Inc., in which they agreed to give the US government 15% of revenue generated from sales of artificial intelligence chips to China. <\/p>\n\n\n\n

That followed Trump securing a \u201cgolden share\u201d from Nippon Steel Corp. that gives the president power to make decisions over United States Steel Corp., which the Japanese steelmaker acquired. <\/p>\n\n\n\n

The Defence Department last month also announced that it will take a\u00a0$400-million equity stake\u00a0in little-known US rare-earths firm MP Materials Corp.<\/p>\n","protected":false},"excerpt":{"rendered":"

The government will be a passive owner, with no board seat or other governance or information rights, Intel said.<\/p>\n","protected":false},"author":341034,"featured_media":562620,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[131,99128,58662,101108,10578],"class_list":["post-608012","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-intel","tag-lip-bu-tan","tag-president-donald-trump","tag-us-chips-and-science-act","tag-us-government"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/608012"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=608012"}],"version-history":[{"count":3,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/608012\/revisions"}],"predecessor-version":[{"id":608020,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/608012\/revisions\/608020"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/562620"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=608012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=608012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=608012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}