Trump’s Equity Stake in Intel: A Bold Strategy for US Chip Production

Earlier today, President Trump commented on the US government’s deal with Intel, describing it as a ‘great deal’ that could set a precedent for similar arrangements with other semiconductor companies. The deal, which involves a 10 percent equity stake in Intel, is tied to the government’s efforts to bolster US chip manufacturing under the CHIPS Act.

Trump’s remarks come ahead of a White House event where he and Intel CEO Lip-Bu Tan will elaborate on the details of the agreement.

As part of the deal, the US government is expected to convert $7.9 billion in grants, allocated to Intel under the CHIPS Act, into an equity stake. Additionally, Intel received a $3 billion grant from the Pentagon’s Secure Enclave program. US Commerce Secretary Howard Lutnick hinted that other semiconductor companies, excluding industry giants like TSMC and Micron, may also see similar equity arrangements.

The government’s stake in Intel will be just under 10 percent, without a board seat or any major governance control. This deal aims to enhance Intel’s US-based manufacturing and could spur competition among fabless chipmakers to increase their US production capacity. However, Bank of America (BofA) raised concerns about potential drawbacks, including a 10% dilution of Intel’s current shares and the increased pressure on the company to deliver on projects like its delayed Ohio fab.

Despite these challenges, Intel’s partnership with SoftBank, which pledged a $2 billion investment to support US semiconductor innovation, highlights the growing importance of reshoring chip production. However, the deal may also face pushback from international customers, particularly in China, where Intel derives a significant portion of its revenue.

With Trump pushing for more deals like this, the future of US semiconductor manufacturing could be dramatically reshaped, but not without controversy. Will these moves help Intel and other chipmakers thrive, or will they create unforeseen complications? Only time will tell.