US government pushes for 10% Intel stake amid US-China chip war

The US authorities could go nan largest shareholder successful Intel, 1 of nan astir important US exertion companies, marking nan first clip Washington has sought ownership successful a Silicon Valley icon.

US Commerce Secretary Howard Lutnick connected Tuesday confirmed nan US authorities is vying for a 10% liking successful Intel, portion of an different woody that would deepen nan Trump administration’s financial ties pinch nan awesome chipmaker.

The move comes weeks aft US President Donald Trump called for Intel's CEO Lip-Bu Tan to resign owed to what he claimed was a conflict of interest. This allegation was linked to Tan's erstwhile domiciled arsenic a task capitalist successful China.

Although rare, it is not unprecedented for nan US authorities to go a important shareholder successful a salient company.

One of nan astir notable instances occurred during nan recession successful 2008, erstwhile nan authorities injected astir $50 cardinal (€42.94bn) into General Motors successful return for a astir 60% liking successful nan automaker erstwhile it was connected nan verge of bankruptcy.

At nan time, moreover that bailout was seen arsenic arguable contempt GM's hardships because it was perceived arsenic blurring nan lines betwixt authorities power and US free marketplace principles. Unlike galore European companies, US ones person insisted connected a complete separation betwixt authorities and backstage ownership of enterprises.

The authorities ended up pinch a astir $10bn (€8.6bn) nonaccomplishment aft it sold its banal successful GM.

A misreading of nan CHIPS act?

Intel historically led nan world successful semiconductor production, tied successful peculiar to PC accumulation and Microsoft. When nan iPhone launched successful 2007, Intel-dominated PC chips nevertheless grounded to triumph a foothold successful smartphones and tablets.

ARM-based chips, which are utilized by Apple and Samsung, became nan mobile standard, leaving Intel stuck successful nan declining PC market.

Intel has besides lagged successful nan AI race, pinch their accepted cardinal processing units not being well-suited for AI workloads. On nan different hand, competitors for illustration Nvidia person surged ahead.

The CHIPS and Science Act, often referred to arsenic conscionable nan CHIPS Act, was a measure passed successful August 2022 by erstwhile US President Joe Biden successful bid to boost nan section US semiconductor industry.

COVID-19 proviso concatenation disruptions and US–China tech tensions highlighted really limited nan US had go connected foreign-made chips, not conscionable for user electronics, but besides defence, cars, AI and infrastructure.

In November 2024, nan US Department of Commerce finalised an statement to assistance Intel up to $7.86bn (€6.75bn) successful nonstop backing done nan CHIPS Act to support their semiconductor manufacturing and precocious packaging operations crossed Arizona, New Mexico, Ohio and Oregon.

Intel was among nan biggest beneficiaries of nan program, but it hasn’t been capable to revive its fortunes while falling down connected building projects spawned by nan CHIPS program.

The institution has received astir $2.2bn (€1.89bn) of nan $7.8bn (€6.75bn) pledged nether nan incentives programme — money that Lutnick derided arsenic a “giveaway” that would amended service US taxpayers if it is turned into Intel stock, which he said would beryllium successful nan shape of non-voting shares truthful nan authorities wouldn’t beryllium capable to usage nan liking to sway really nan institution is managed.

“We deliberation America should get nan use of nan bargain,” Lutnick told CNBC arsenic he explained why Trump is pushing for nan deal. “It’s evident that it’s nan correct move to make.”

The conception of nan US authorities holding a immense liking successful Intel would person seemed inconceivable backmost successful nan company’s heyday erstwhile its processors were powering a individual machine roar that began successful nan mid-1970s.

But Intel’s ongoing struggles besides intends nan US authorities is taking connected a risky investment.

US authorities arsenic biggest shareholder

The US government’s negotiations to go a awesome Intel shareholder are coming connected nan heels of a $2 cardinal (€1.7bn) finance Japanese exertion elephantine SoftBank Group, disclosed precocious connected Monday.

SoftBank is accumulating its 2% liking successful Intel astatine $23 (€19.70) per stock — a flimsy discount from nan stock’s value erstwhile its finance was announced.

Intel’s shares surged astir 7% to adjacent astatine $25.31 (€21.74) connected nan news of SoftBank’s large stake connected Intel, coupled pinch Trump’s plans for nan company.

SoftBank invests successful an array of companies that it sees arsenic holding semipermanent potential. It has been stepping up investments successful nan United States since Trump returned to nan White House.

In February, its president Masayoshi Son joined Trump, Sam Altman of OpenAI and Larry Ellison of Oracle successful announcing a awesome finance of up to $500bn (€429.38bn) successful a task to create circumstantial artificial intelligence infrastructure for OpenAI called Stargate.

“Semiconductors are nan instauration of each industry," Son said successful a statement. ”This strategical finance reflects our belief that precocious semiconductor manufacturing and proviso will further grow successful nan United States, pinch Intel playing a captious role.”

Trump’s liking successful Intel is besides being driven by his desire to boost spot accumulation successful nan US, which has been a focal constituent of nan waste and acquisition warfare that he has been waging passim nan world since he returned to nan White House earlier this twelvemonth for his 2nd word successful office.

“We want Intel to beryllium successful successful America,” Lutnick said during his CNBC interview.

Intel is weighted astatine astir $110bn (€94.4bn), meaning a 10% authorities liking would equate to astir $11bn (€9.44bn) astatine existent prices.

Other awesome shareholders see Vanguard, BlackRock, and State Street.

A 10% US authorities liking would almost surely vault Washington up of Vanguard arsenic Intel’s largest azygous shareholder, unless system arsenic non-voting shares extracurricular nan normal count.