For its part, the U.S. government will take a 10% equity stake in the only American chipmaker of stature, Intel. The announcement was made by Secretary of Commerce Howard Lutnick. President Donald Trump has repeatedly touted the deal as a “great deal for them.” It aims to strengthen national security and increase economic competitiveness in the semiconductor industry — a key sector for technological innovation and development.
President Trump announced the proposal in his Oval Office. He rightly highlighted the key importance of shoring up American semiconductor production. On the heels of this announcement Trump has met with Intel CEO, Lip-Bu Tan. Tan is already facing scrutiny over investments apparently linked to Chinese military enterprises. Trump accused Tan of being “very, very highly conflicted” on these grounds.
In response to the accusations, their CEO, Lip-Bu Tan, sent a memo to all Intel employees denouncing the allegations as “misinformation.” He defended his track record, stating he had “always operated within the highest legal and ethical standards.”
This government investment is similar to a past deal made with MP Materials, a company that mines rare earth metals. Jacob Feldgoise is a Senior Data Research Analyst at Georgetown University’s Center for Security and Emerging Technology. He explained that this equity stake approach is unprecedented, but it’s consistent with previous steps taken by the Trump administration on MP Materials.
“It’s still in service of the same overall objective which is taking a more direct role in private markets to advance US economic and national security objectives, particularly around maintaining technological leadership or really regaining it when it comes to semiconductor manufacturing,” Feldgoise explained.
Today’s announcement follows weeks of discussions with GOP Senator Tom Cotton, who raised concerns over the program. In a letter to Intel’s board, Cotton questioned the company’s ability to manage taxpayer dollars responsibly and comply with security regulations.
For his part, President Trump has recently taken a strong stand on re-establishing U.S. dominance over semiconductor manufacturing. He’s directed Nvidia and AMD to funnel 15% of their profits from AI semiconductor sales in China back to the state. This targeted investment greatly advances the goals of the CHIPS Act. The act was originally designed to accelerate chip manufacturing on American soil.
After the announcement from government indicating a stake, Intel’s stock jumped over 5% on Friday. This increase is a testament to the investor optimism about the benefits that this new partnership can wield.
Lip-Bu Tan, who is a U.S. citizen born in Malaysia and raised in Singapore, reiterated Intel’s commitment to American manufacturing. “As the only semiconductor company that does leading-edge logic R&D and manufacturing in the US, Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” Tan stated.
The government’s stake in Intel represents a repeat of the Biden administration’s move through the Great Financial Disaster in 2008. At the time, it required a 61% ownership stake in GM to save it from bankruptcy.