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President Trump says Intel has agreed to let the US government take a 10% stake in the company.
“I said, ‘I think you should pay us 10% of your company,’ and they said yes,” Trump claimed while speaking to reporters at the White House on Friday. “That’s about $10 billion.”
Intel has published more details, including how the deal amounts to the US making “an $8.9 billion investment in Intel common stock.” The funding is made up of the “remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the US CHIPS and Science Act,” the company said. Another $3.2 billion is coming from the “Secure Enclave program,” which is focused on using Intel to produce chips for the US government, including the Defense Department.
“The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion,” Intel noted.
This afternoon, US Commerce Secretary Howard Lutnick also tweeted that, “The United States of America now owns 10% of Intel, one of our great American technology companies. This historic agreement strengthens US leadership in semiconductors, which will both grow our economy and help secure America’s technological edge.”
Specifically, the government is purchasing 433.3 million primary shares of Intel common stock at a price of $20.47 per share for about a 9.9 percent stake. The US will also have “no Board representation or other governance or information rights.”
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In addition, the deal seems to include an insurance policy to discourage Intel from ditching its foundry business — the major reason the Trump administration is investing with the goal of bolstering US semiconductor manufacturing. “If Intel ceases to own at least 51% of the foundry business,” the US can exercise an option to buy an additional 5% stake in Intel, but at $20 per share. This means the US could still capture more of Intel’s value at a relatively cheap price if the company does try to spin off or sell its foundry business, which would likely cause its stock value to rise.
The deal arrives after Lutnick confirmed earlier this week that the White House was working to take a stake in Intel in exchange for the company receiving nearly $8 billion in federal subsidies from the US CHIPS Act to help it expand its manufacturing footprint.
During his Friday remarks, Trump briefly mentioned his meeting with Tan earlier this month after the president called for the executive’s resignation, citing his reported ties to Chinese companies. He later backtracked.
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“And I said, ‘I think it would be good having the United States as your partner,’ and he agreed,” Trump claimed. “And they’ve agreed to do it. And I think it’s a great deal for them.”
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Intel’s CEO “walked in, wanting to keep his job. And he ended up giving us $10 billion to the United States,” Trump said. “So we picked up $10 billion.”
According to Lutnick, taking a “non-voting” stake will enable the federal government to reap financial gains for US taxpayers. But that assumes Intel can engineer a turnaround and lift its stock value.
In his Friday remarks, Trump also noted, “And we do a lot of deals like that. I’ll do more of them,” alluding to AMD and Nvidia’s recent agreement to give the US a 15% revenue slice of the companies’ AI chip sales to China.
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Democrats have questioned the legality of such a deal. In response to the Intel deal, Senator Mark Warner (D-Virginia) also said “Congress must apply thorough scrutiny for potential conflicts of interest or undue interference” in the private sector.
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Meanwhile, some analysts have said the US needs to do more to convince tech companies to buy chips from Intel if the Trump administration is serious about reviving the company.
One controversial way Trump could do so is to tariff foreign-made semiconductors since Intel manufactures some chips in the US. Last week, Trump indicated he might impose duties as high as 300% on foreign-made chips, which could ensnare products from Apple, Nvidia, and AMD.
On Friday, the president said that Intel had suffered “bad management over the years,” falling behind Taiwan’s TSMC. However, Trump also argued that tariffs could’ve salvaged the company.
“Intel was the biggest, most powerful chip company in the world. And then, they started…going to foreign countries, in particular Taiwan,” he said, likely alluding to major tech companies, such as AMD, Apple, Nvidia, and Qualcomm.
“And if we had a president that would have said, ‘Okay, you can go to Taiwan, but we’re going to put a 100% tariff, or 200, or 300, or 500% tariff, anybody that sells into the United States has to pay,’ they wouldn’t have left,” Trump added. “They wouldn’t have ever left.”
Although Intel’s chip manufacturing technology has lagged behind TSMC, it’s questionable whether a tariff would’ve made a difference since Intel only started a major expansion into the foundry business in 2021. In the meantime, companies such as AMD, Apple, and Nvidia have or continue to use Samsung and TSMC for their contract chip manufacturing.
About Michael Kan
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