Intel’s shares increased by 7.4% following reports that the Trump administration is contemplating acquiring stock in a faltering US chip manufacturer.
According to Bloomberg, any potential government investment will be directed towards the development of Intel’s factory hubs in Ohio. This move aims to bolster the financial stability of chipmakers during a period when Intel is implementing job cuts as part of broader cost-reduction measures.
Discussions about this possible investment emerged from a meeting earlier this week between US President Donald Trump and Intel CEO Rip Bu Tang, which took place just days after Trump accused Tan of having connections with the Chinese Communist Party before resigning. Bloomberg indicated that Tan is likely to lead the chipmaker going forward.
In response to the Bloomberg article, White House spokesperson Kush Desai stated, “The dialogue regarding virtual transactions should be viewed as speculation unless formally announced by the administration.”
Despite this, the news triggered excitement among investors, with shares climbing by 7.4% on Thursday to $23.86 (£17.60), elevating the company’s market capitalization to $104 billion.
This move regarding Intel reflects the Trump administration’s ongoing efforts to intervene in significant private sectors. The President has consistently threatened to impose tariffs of up to 100% on imported semiconductors and chips.
Earlier this week, the US government also unveiled a deal involving advanced microdevices with chip manufacturer Nvidia, which commits to paying 15% of revenues derived from AI chip sales to China to the US government. Last month, the Department of Defense revealed that rare earth producer MP Materials would need $400 million in preferred stock.
However, investing in Intel represents a notable shift from Trump’s recent critical comments on the company’s leadership.
Trump expressed his thoughts on the True Social Media Platform last Thursday, stating, “The Intel CEO is exceedingly contradictory and must resign immediately. There’s no alternative to this problem. Thank you for your attention to this matter!”
His remarks came shortly after U.S. Republican Senator Tom Cotton sent a letter to Intel Chairman Frank Yearly regarding Tan’s investment and its connections to semiconductor companies linked with the CCP and its military faction, the People’s Liberation Army.
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In April, Reuters disclosed that Tan had invested in numerous Chinese high-tech firms, with at least eight connections to the People’s Liberation Army.
Cotton questioned Intel’s board regarding whether Tan divested these investments, raising concerns over Tan’s previous role at Cadence Design Systems, which was found to have sold products to China’s National University of Defense Technology, in breach of US export controls.
At that time, Intel remarked that both the board and CEO are “deeply dedicated to advancing US domestic and economic security priorities, making significant investments in line with the President’s agenda to prioritize America.” Intel has been manufacturing within the US for 56 years and expressed eagerness to maintain collaboration with the administration.
Intel was approached for a statement.
Source: www.theguardian.com
