Why Trump & the US Government Want a 10% Stake in Intel
The US government is currently weighing up taking an equity stake in US-based electronics giant Intel, in exchange for grants the company was already committed to receive under the Biden-era CHIPS Act, according to comments US Commerce Secretary Howard Lutnick made in an interview with CNBC.
"We should get an equity stake for our money, so we'll deliver the money which was already committed under the Biden administration," Lutnick says.
"We'll get equity in return for it."
Previously, the government was discussing taking a 10% stake in Intel, according to reports.
The arrangement represents a significant departure from traditional government funding models, where grants typically come with performance milestones rather than ownership stakes.
Behind Intel's struggles
The deal could provide crucial support for Intel, which has faced mounting challenges in recent years as demand for its chips has waned, while competitors like TSMC and Nvidia have surged ahead.
Intel is currently valued at US$101bn, a steep decline from its heyday in the early 2000s.
The company has received US$2.2bn of up to the US$7.86bn it was granted through the 2022 CHIPS Act, but these grants are tied to milestones around fabrication construction and output.
Over the last five years, Intel invested US$107.5bn in capital expenditures and US$78.8bn in R&D expenditures, the vast majority dedicated to expanding its US manufacturing capacity.
Some chip industry experts and members of the Trump administration argue that keeping Intel afloat is essential to US national security, as it lessens the country's reliance on chipmakers overseas.
Political theatre
Intel's situation has been complicated by recent upheaval in its leadership team, combined with recent political controversies that have focused on the firm's current CEO, Lip-Bu Tan.
Tan has led the firm since December 2024, when Intel announced the retirement of long-term leader Pat Gelsinger, who had struggled to turn around the company's fortunes.
However, Tan became caught in political crosshairs earlier this month when Trump called on the CEO to resign from Intel in reaction to concerns about his ties to investments that reportedly have links to the Chinese People's Liberation Army.
In a tonal U-turn less than a week later, Trump met with Tan and began praising the CEO.
Experts are sceptical about a deal
The proposed arrangement has drawn criticism from some quarters.
"It's not the right policy to have the US government own things, to have privatisation in reverse," says Stephen Moore, a visiting fellow at The Heritage Foundation and a former Senior Economic Advisor to Trump's 2016 campaign.
"That's similar to Europe's industrial model, and we haven't done that often here in the US because a lot of it ends up failing."
Elsewhere, Patrick Moorhead, a long-time semiconductor industry analyst and CEO of research firm Moor Insights & Strategy, describes the current situation as more about optics than substance.
"It's more political theatre than anything else," he says.
"I think what it accomplishes is it gives the Trump administration the ability to say, 'What Biden did was a giveaway, and I'm making deals.'"
The market response
Earlier this week, SoftBank announced it was buying roughly US$2bn worth of Intel shares, which briefly boosted the chip firm's stock price.
SoftBank's investment saw the Japanese bank take control of roughly 2% of Intel, which provided some market confidence in the company's prospects.
Lutnick told CNBC that, in the case of Intel, the Trump administration would not get a voting stake or a say in the company's operations.
"Intel is deeply committed to supporting President Trump's efforts to strengthen US technology and manufacturing leadership," Intel spokesperson Cory Pforzheimer said in a statement.
Many questions remain about whether the deal will actually materialise and how it might affect other companies considering government support.
The arrangement could set a precedent for future government involvement in private industry, particularly in sectors deemed critical to national security.
