Intel’s $11B Government Stake: Boon or Burden?

Intel’s uneasy dance with Washington is edging closer to reality. Bank of America has reiterated a Neutral rating on the chipmaker, maintaining a $25 price target, as speculation swirls around an $11 billion U.S. government stake.

The move would effectively transform the CHIPS Act’s $7.9 billion grant, plus an additional $3 billion Pentagon subsidy, into equity – giving the federal government about 10% ownership in Intel without voting rights.

BofA analysts argue the upside is clear: Intel’s U.S.-based fabs could attract more customers eager to advertise a ‘made in America’ label, a theme echoed by SoftBank’s fresh $2 billion pledge into Intel’s semiconductor roadmap. Yet the analysts warn of serious tradeoffs. Existing shareholders face a dilution hit of around 10%, while the company still shoulders pressure to deliver long-delayed projects like its Ohio mega-fab. Perhaps more worrying, nearly 30% of Intel’s 2024 revenue came from China, where customers may bristle at closer U.S. government ties.

Meanwhile, the Trump administration is considering applying the same equity conversion trick to other chip titans, including Micron, Samsung, and TSMC. If that happens, Intel’s once-unique advantage of Washington’s backing could quickly erode into just another divided slice of political patronage.

For investors, the picture is muddled: Intel gains political insurance and a shot at stabilizing its manufacturing reputation, but the near-term hit to shareholders and potential geopolitical backlash loom large. Until clarity arrives on Intel’s bleeding-edge 18A process and its ability to win new external customers, the stock looks stuck in neutral.