US Secretary of Commerce Howard Lutnick announced on Friday that Washington will take a 10% ownership stake in Intel.
“This historic agreement strengthens American leadership in semiconductors. It will boost our economy and protect our technological edge,” Lutnick wrote on X. He shared the statement with a photo of himself alongside Intel CEO Lip-Bu Tan.
President Donald Trump confirmed the deal earlier in the Oval Office. He called it “a great deal for them.”
Shares of the Santa Clara-based chipmaker rose more than 5% on Friday.
Intel confirmed that the US government will invest $8.9bn (£6.6bn) in its common stock.
Grants redirected to fund investment
Intel said the funds will come from grants already approved but not yet delivered. This includes money pledged under the CHIPS and Science Act, passed during President Joe Biden’s administration.
“As the only semiconductor company conducting leading-edge R&D and manufacturing in the US, Intel remains committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s focus on domestic chipmaking. He said it drives “historic investments in an industry essential for economic growth and national security.”
The CHIPS Act aims to restore semiconductor production in the United States.
Intel struggles to compete
Intel has faced challenges in expanding chip capacity. It trails Nvidia, whose market value has soared past $4tn while Intel’s remains near $100bn.
Once a Silicon Valley powerhouse, Intel missed the mobile technology surge. It also lost ground in artificial intelligence, where Nvidia leads.
Trump presses Intel CEO
Trump recently demanded Tan’s resignation. He accused the Intel chief of having questionable ties to China.
The president called Tan “highly conflicted” over alleged investments in companies linked to the Chinese military.
Tan rejected the claims as “misinformation” in a note to employees. He stressed he always followed legal and ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. US law allows citizens to invest in Chinese firms.
Trump’s criticism followed a letter from Republican Senator Tom Cotton to Intel’s board. Cotton questioned whether Intel could manage taxpayer money responsibly and comply with security rules.
After the controversy, Tan visited Trump at the White House.
White House calls move unprecedented
Press Secretary Karoline Leavitt described the deal as “a creative idea that’s never been done before.”
Reports said the Trump administration also required Nvidia and AMD to give Washington 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, compared the Intel stake to previous grant funding.
“It serves the same purpose,” Feldgoise said. “It shows stronger government involvement in markets to secure economic and security goals. The objective is regaining leadership in semiconductor manufacturing.”
The deal is unusual today but has historical parallels.
Past examples of government stakes
During the 2008 financial crisis, Washington took a majority stake in General Motors as bankruptcy loomed. The government later exited, taking a $10bn loss.
Feldgoise noted that Trump’s administration followed a similar approach earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That agreement drew scrutiny from watchdog groups after it emerged that the Department of Defense used a Cold War-era law to bypass procurement rules.
