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Earlier today, President Trump opined publicly on the US government’s equity stake agreement with Intel, describing it as a “great deal” that may be replicated with other semiconductor players. Intel’s CEO, Lip-Bu Tan, and Trump are set to unveil the details of this equity deal at a White House event later today.
Over the past few days, we’ve noted that the Trump administration has been seeking a 10 percent stake in Intel. To achieve this, the administration plans to convert $7.9 billion in grants earmarked for Intel under the CHIPS Act fund and $3 billion from the Pentagon’s Secure Enclave program into equity.
According to recent comments by US Commerce Secretary Howard Lutnick, the administration may similarly acquire stakes in other smaller semiconductor companies, excluding industry giants like TSMC and Micron. TSMC reportedly threatened to abandon its CHIPS Act award of $6.6 billion if the administration pursued converting the grant into equity.
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The US government is now poised to acquire a 9.9 percent stake in Intel without a board seat or significant governance role, as reported by the Wall Street Journal.
Bank of America (BofA) identified the primary advantage for Intel: bolstering its U.S.-based manufacturing capabilities, especially as new and existing fabless customers vie to expand their made-in-the-U.S. presence. SoftBank similarly concluded that this investment would benefit it by investing $2 billion in Intel, seeking exposure to semiconductor innovation in the United States.
However, BofA warns of potential drawbacks: a 10 percent dilution for current shareholders without additional benefits, renewed pressure to complete critical projects like Intel’s delayed Ohio fab, and likely higher scrutiny or pushback from Chinese customers who accounted for about 29% of Intel’s total sales in FY24.
We will continue to update this post with pertinent details as they become available.
