The United States government, under the Trump administration, has embarked on an unconventional strategy to deepen its ties with the domestic semiconductor industry, with a focus on Intel Corp. In a recent development, U.S. Commerce Secretary Howard Lutnick confirmed that the government is seeking a 10% stake in the Silicon Valley company. This move is part of a broader effort to bolster American technological leadership and ensure a resilient domestic supply chain for critical technologies.
The proposed investment would be realized by converting federal grants, previously allocated to Intel under the CHIPS and Science Act during the Biden administration, into company stock. This would transform the U.S. government into one of Intel’s most significant shareholders, representing a notable departure from traditional government-corporate relationships. This development coincides with a $2 billion investment by Japanese technology conglomerate SoftBank Group, which is acquiring a 2% stake in Intel at $23 per share. The simultaneous interest from both the U.S. government and a major foreign investor highlights the strategic importance of Intel’s role in the global technology landscape despite the company’s recent challenges.
Corporate Challenges and Financial Maneuvers
The push for government and private investment comes at a pivotal time for Intel, which has struggled to keep pace with rivals such as Nvidia and Advanced Micro Devices (AMD), especially in the burgeoning field of artificial intelligence. While Intel was a primary beneficiary of the CHIPS program, having been pledged approximately $7.8 billion in incentives, it has received only about $2.2 billion thus far and has faced delays in construction projects, including a key semiconductor plant in Ohio. The new government investment model, as described by Secretary Lutnick, aims to transform these grants from a “giveaway” into a more beneficial arrangement for U.S. taxpayers.
}The stock would reportedly be in the form of non-voting shares, preventing government interference in corporate operations. However, this is considered a high-risk investment given Intel’s recent performance. The company’s current market value hovers around $110 billion, significantly below its peak a quarter-century ago. New CEO Lip-Bu Tan, who was appointed in March, is leading a turnaround effort focused on cost-cutting measures, which have included a significant reduction in the workforce.
The Broader Context of American Chip Production
The administration’s interest in Intel is intrinsically linked to its objective of revitalizing domestic chip production. This initiative is a central component of an ongoing trade war and a strategy to reduce dependency on foreign manufacturing, particularly in China. The administration is also imposing a 15% commission on chip sales in China by companies like Nvidia and AMD in exchange for export licenses. These commissions are expected to generate billions of dollars in government revenue. The pursuit of a government stake in Intel follows a recent, public dispute between President Donald Trump and CEO Lip-Bu Tan.
On August 7, the President had publicly called for Tan’s resignation over concerns about his previous investments in Chinese chipmakers. The situation was diffused after Tan professed allegiance to the U.S. and met with the President, who then praised the CEO for his “amazing story.” This resolution paved the way for the current investment negotiations. SoftBank’s Chairman, Masayoshi Son, has also demonstrated his commitment to the U.S. market, having joined President Trump, Sam Altman of OpenAI, and Larry Ellison of Oracle in a joint announcement for a major $500 billion artificial intelligence project named Stargate.