Trump Administration Seeks 10% Ownership Stake in Intel in Unprecedented Move
SAN FRANCISCO (AP) — In a significant and unprecedented move, the Trump administration is actively pursuing a 10% ownership stake in Intel, one of Silicon Valley’s foundational technology companies. This push comes less than two weeks after President Donald Trump publicly demanded the resignation of Intel CEO Lip-Bu Tan, marking a dramatic shift in the administration’s engagement with the private sector and a deepening of its “America First” manufacturing agenda.
The proposed deal involves converting substantial government grants, initially pledged to Intel under the Biden administration’s CHIPS and Science Act, into equity. If finalized, the U.S. government would emerge as one of Intel’s largest shareholders, a move that blurs the traditional lines between public and private enterprise in the world’s largest economy.
A Strategic Pivot: From Demands to Ownership
The administration’s interest in Intel is deeply intertwined with its broader strategy to bolster domestic chip production and reduce reliance on overseas manufacturers. This objective has been a cornerstone of Trump’s trade policy, aiming to solidify the U.S.’s technological dominance over rivals like China, particularly in the burgeoning field of artificial intelligence.
Precedent for direct intervention has already been set within the chip sector. The Trump administration has mandated that leading AI chipmakers Nvidia and Advanced Micro Devices (AMD) pay a 15% commission on their chip sales in China in exchange for securing export licenses. This suggests a more hands-on approach to controlling critical technology supply chains.
Interestingly, this pursuit of an Intel stake follows a recent, highly publicized spat between President Trump and Intel’s current CEO. On August 7, Trump posted an unequivocal call for Lip-Bu Tan’s resignation on Truth Social. Tan had been hired just five months prior to spearhead a turnaround for the struggling chipmaker. The demand stemmed from national security concerns raised over Tan’s past investments in Chinese tech companies during his career as a venture capitalist. However, the situation dramatically reversed after Tan issued a public letter to Intel employees professing his allegiance to the U.S. and subsequently met with the President at the White House. Following the meeting, Trump publicly lauded Tan for his “amazing story,” signaling a surprising truce.
Intel’s Vulnerability Paves the Way
While Intel has remained silent on the proposed government investment, the company’s recent financial performance suggests it may have limited leverage. After decades of unparalleled growth fueled by the personal computer boom, Intel failed to adapt to the mobile computing revolution sparked by the iPhone’s 2007 debut. More recently, it has fallen significantly behind competitors like Nvidia and AMD in the booming artificial intelligence market.
Intel reported staggering losses, with nearly $19 billion in the last fiscal year and an additional $3.7 billion in the first six months of the current year. These financial setbacks have forced CEO Tan to implement aggressive cost-cutting measures, including a significant workforce reduction. By the end of this year, Intel anticipates its employee count will drop to approximately 75,000, representing a 25% reduction from the end of last year.
A Rare, Yet Not Unprecedented, Government Stake
The U.S. government becoming a major shareholder in a prominent company is a rare event, though not entirely without precedent. One of the most notable historical examples occurred during the 2008 Great Recession, when the government injected nearly $50 billion into General Motors. This bailout, in exchange for approximately a 60% stake, saved the automaker from imminent bankruptcy. However, the government ultimately incurred a loss of roughly $10 billion when it divested its GM shares.
U.S. Commerce Secretary Howard Lutnick addressed concerns about government interference during a CNBC interview on Tuesday, stating that the administration intends no meddling in Intel’s operations and will hold non-voting shares. Yet, some analysts remain watchful, pondering whether such a significant financial tie could subtly influence other companies to prioritize Intel’s chips in an effort to curry favor with the administration.
The CHIPS Act: A “Giveaway” Transformed?
Intel was initially a major beneficiary of President Biden’s bipartisan CHIPS and Science Act, a legislative effort designed to boost domestic semiconductor manufacturing and research. Despite receiving about $2.2 billion of the $7.8 billion pledged under this incentive program, Intel has struggled to fully leverage the funds to revive its fortunes or expedite related construction projects.
Secretary Lutnick, however, has publicly criticized these grants as a “giveaway,” arguing that converting them into Intel stock would better serve American taxpayers. “We think America should get the benefit of the bargain,” Lutnick asserted on CNBC. “It’s obvious that it’s the right move to make.” This proposed conversion underscores a new strategy to ensure a more direct return on public investment in vital industries, signaling a potential shift in how government aid for strategic sectors is structured moving forward.
