US Takes Nearly 10% Stake in Intel, Clinching Unorthodox Deal

President Donald Trump met with Intel Corp. Chief Executive Officer Lip-Bu Tan at the White House to finalize a deal giving the US government a nearly 10% equity stake in the beleaguered chipmaker. Under the agreement unveiled Friday, the US will receive 433,323,000 shares of common stock — representing 9.9% of the fully diluted common shares in Intel — with the government pledging to release nearly $8.87 billion in funding under the Chips and Science Act, people familiar with the terms said, speaking on condition of anonymity to outline the deal before it was formally unveiled. That represents the remaining Chips Act funding that was awarded but not yet distributed to Intel, they said. The shares are non-voting and there is no board seat for the US government, according to the people. Tan was at the Commerce Department building on Friday finalizing the deal. Bloomberg News Economic Statecraft Reporter Joe Deaux joins Bloomberg Businessweek Daily to discuss.

In a social media post, Trump described the transaction as a “great Deal for America and, also, a great Deal for INTEL.”

“Building leading edge Semiconductors and Chips, which is what INTEL does, is fundamental to the future of our Nation,” he said.

The US taking partial ownership marks a stunning level of intervention in an American company, cutting against the principles of free-market capitalism that investors and policymakers have long considered sacrosanct except in the most extraordinary situations, such as war or a systemic economic crisis.

The administration considers it an extraordinary and unique situation — and sees semiconductor production as a matter of national security, a White House official said. Intel is one of a small number of American companies capable of making chips at scale on domestic soil, the official said, and the administration looks to avoid shortages like those in recent years that rattled US supply chains.

Though the administration telegraphed its intentions with Intel in recent weeks, the move creates untold risks that could distort markets and the flow of capital as well as lead to massive taxpayer losses. But the government’s bet could also pay off in a major way for a onetime industry pioneer. Intel has faced a turbulent stretch with investors worried it is losing its technological edge and falling too far behind competitors.

The approach represents a new way for Trump to wield Chips Act funding, after long assailing the law signed by his predecessor, former President Joe Biden. Trump has said the law’s subsidies for semiconductor manufacturers didn’t provide any return for US taxpayers. Intel was already poised to be the biggest beneficiary of money from the Chips Act.

As part of the pact, the government will receive a five-year warrant — at $20 per share for an additional 5% of common stock — that’s only exercisable if Intel ceases to own at least 51% of its chip-manufacturing business. PJT Partners served as Intel’s financial adviser on the transaction.

Santa Clara, California-based Intel touted its more than $100 billion effort to expand manufacturing in the US and its new factory in Arizona, which is set to begin high-volume production this year. But it didn’t discuss a facility planned for Ohio that has been repeatedly delayed.

The deal represents a dramatic reversal from earlier this month, when Trump called for Tan’s ouster and accused him of being “highly conflicted” because of concerns over his earlier ties to China. Those remarks prompted the sit-down between the president and the Intel CEO, laying the groundwork for Friday’s deal.

“I said, ‘You know what? I think the United States should be given 10% of Intel,’ and he said, ‘I would consider that,’ and I said, ‘Well, I’d like you to do that,’” Trump said of his discussion with Tan.

Commerce Secretary Howard Lutnick has signaled that Trump wants to see more direct benefits to the US from funding key companies instead of just giving away grants. Lutnick worked to finalize the details of the agreement since Tan and Trump’s meeting.

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