U.S. Government Takes 10% Stake in Intel Amid Semiconductor Crisis

Santa Clara, California — The U.S. government announced on Friday it will acquire a 10% stake in Intel Corp, a move aimed at strengthening the country’s presence in the semiconductor industry. This significant investment, totaling $8.9 billion, is part of a broader strategy to enhance America’s technological leadership and national security.

President Donald Trump revealed the agreement during remarks in the Oval Office, calling it a “great deal” for the chipmaker. Trump stated that Intel CEO Lip-Bu Tan had agreed to the deal during a recent meeting. Shares of Intel surged by more than 5% immediately following the announcement.

According to Intel, the investment funds will stem from grants previously awarded to the company under the CHIPS and Science Act, legislation designed to boost U.S. chip manufacturing. Lutnick said this deal signifies a historical agreement for the country.

“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American-made,” said Tan. This proclamations come as Intel faces stiff competition from rivals like Nvidia, who have outpaced them in recent years.

Intel’s commitment has been further tested by concerns about potential security risks associated with its CEO’s ties to Chinese firms. Trump previously accused Tan of possible conflicts of interest linked to Chinese military investments, which Tan denied as misinformation.

The stakes are high for the U.S. due to Intel’s position in the semiconductor market, which is critical for both economic and national security. The government’s direct stake could provide Intel with necessary resources amidst doubts about its capacity to attract future customers for its forthcoming chip factories, particularly given Intel’s recent financial losses.

Observers like Chris Miller, a professor at Tufts University, emphasized the importance of understanding the customer base for Intel’s operations moving forward: “How this discussion about equity financing relates to the question of who’s going to be the customer for Intel is a key part of the puzzle.”

This new venture into equity investment by the government is seen as part of an unprecedented approach to address the challenges facing America’s semiconductor industry while aiming to mitigate dependency on foreign production. The success of this strategy remains to be seen, as both the company and the government navigate a complicated market landscape.