US government secures 10% Intel stake after Trump's big move
What's the story
In a landmark move, chipmaker Intel has agreed to give the US government a 9.9% stake in its business. The announcement was made by President Donald Trump and Intel on Friday. The deal comes after Trump's administration asked for an equity stake in exchange for large grants committed during Joe Biden's presidency. Intel clarified that the government's investment in the company would be a passive ownership, without any board representation or other governance or information rights.
Stake details
Deal worth $8.9 billion
As part of the deal, the US government will get 433.3 million shares of common stock, which is a 9.9% stake in Intel. The investment amounts to $8.9 billion, partially funded by $5.7 billion in grants awarded but not yet paid under the CHIPS and Science Act. This major legislation was passed during Biden's presidency and has been criticized by Trump.
Funding sources
Trump posts about 'passive' ownership
The remaining $3.2 billion of the investment comes from an award to Intel under the Secure Enclave program. This new investment will be in addition to $2.2 billion in CHIPS grants that Intel has already received, bringing the total to $11.1 billion. "The United States of America now owns 9.9% of INTEL," Trump posted on his social media platform Truth Social after negotiations with Intel CEO Lip-Bu Tan.
Agreement impact
Analysts raise concerns over implications of stake
Commerce Secretary Howard Lutnick hailed the deal as a historic agreement that strengthens US leadership in semiconductors. However, some analysts have raised concerns about the implications of such a stake. Rob Enderle, an independent tech analyst, warned it could be "a step toward nationalizing private business." Scott Lincicome from the Cato Institute called it "a terrible decision, bad for almost everyone."
Commitment statement
Trump's demand for Tan's resignation
In light of the deal, Tan from Intel reiterated the company's commitment to ensuring that the world's most advanced technologies are American-made. The company is investing over $100 billion to expand its US sites. Earlier this month, Trump had demanded Tan's resignation after a Republican senator raised national security concerns over his ties with Chinese firms.