Donald Trump and Secretary of Commerce Howard Lutnick have announced that the US government has secured a groundbreaking 10% stake in Intel through a partnership with struggling chip manufacturers. This marks another significant intervention by Corporate America’s White House.
Lutnick stated on X: “Big News: The United States now owns 10% of Intel, one of our nation’s leading technology firms. We extend our gratitude to Intel CEO @Lipbutan1 for negotiating fair agreements benefit Americans.”
Trump met with Lipbu Tang on Friday and posed for a photo with Lutnick. This move was prompted by the US president’s demand for Intel’s resignation regarding its ties with Chinese companies after a previous meeting between Tang and Trump earlier this month.
“He approached us to continue his efforts and ultimately committed $1 billion to the US, so we secured a billion,” Trump shared on Friday.
Although Trump did not detail the $10 billion sum, it approximately corresponds to the financial assistance Intel receives from the government under the Chips and Science Act to build a US chip manufacturing facility.
Intel’s investment is the latest in a series of extraordinary deals brokered by the US administration under Trump, including allowing AI chip giant Nvidia to sell H20 chips to China. Amd has similarly pursued a comparable transaction.
Additionally, the Department of Defense is poised to become the principal stakeholder in small mining companies, enhancing the production of rare earth magnets, with the US government negotiating specific veto rights and “golden shares” as part of a deal enabling Nippon Steel to acquire US steel.
The extensive range of US government interventions in corporate affairs is raising concerns among critics who argue that Trump’s measures will establish a new category of corporate risk.
This development follows a $2 billion capital infusion from SoftBank Group, a significant endorsement for a troubled US chipmaker now navigating a turnaround. Daniel Morgan, senior portfolio manager at Synovus Trust, mentioned that Intel’s challenges extend beyond the financial boosts from SoftBank or government profits.
“Without government backing and strong financial allies, it’s tough for Intel’s Foundry units to generate enough capital to keep expanding fabs at a reasonable pace,” he stated. “We need to catch up with TSMC [Taiwan Semiconductor Manufacturing Company] to be competitive technically.”
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The 10% stake is valued at approximately $10 billion at the current stock price. Lutnick noted this week that these shares do not confer voting rights, meaning the US government cannot dictate the company’s operational decisions.
Federal backing could provide Intel with more leeway to revitalize its struggling casting business, analysts observe, though it still faces weaknesses in its product roadmap and challenges in attracting customers to its new factories.
Tang, who took on a leading role at Intel in March, has the responsibility of reviving the iconic American chipmaker, which reported a loss of $18.8 billion in 2024—the first loss since 1986.
Source: www.theguardian.com
