U.S. President Donald Trump confirmed on Friday that the U.S. government has secured a 10% stake in struggling Silicon Valley pioneer Intel in a deal that was completed only a couple of weeks after he called the company's CEO a "conflicted" leader and called for him to resign.
"The United States of America now fully owns and controls 10% of INTEL, a Great American Company that has an even more incredible future,” Trump wrote in a post.
The U.S. government is getting the stake through the conversion of $11.1 billion in previously issued funds and pledges.
All told, the government is getting 433.3 million shares of non-voting stock priced at $20.47 apiece, a discount from Friday's closing price of $24.80. That spread means the U.S. government already has a gain of $1.9 billion, on paper.
The remarkable turn of events has made the U.S. government one of Intel's largest shareholders at a time when the Santa Clara, California, company is in the process of laying off more than 20,000 workers as part of its latest attempt to recover from years of missteps under various CEOs.
Intel's current CEO, Lip-Bu Tan, has only been on the job for slightly more than five months and earlier this month, it looked like he might be on shaky ground already after some lawmakers raised national security concerns about his past investments in Chinese companies while he was a venture capitalist.
Trump latched onto those concerns in an Aug. 7 post, demanding that Tan resign.
But Trump backed off after the Malaysian-born Tan professed his allegiance to the U.S. in a public letter to Intel employees and went to the White House to meet with the president, leading to a deal that now has the U.S. government betting that the company is on the comeback trail after losing more than $22 billion since the end of 2023.
Trump hailed Tan as a "highly respected" CEO in his Friday post.
In a statement, Tan applauded Trump for "driving historic investments in a vital industry" and resolved to reward his faith in Intel.
"We are grateful for the confidence the President and the Administration have placed in Intel and we look forward to working to advance U.S. technology and manufacturing leadership," Tan said.
Intel's current stock price is just slightly above where it was when Tan was hired in March and more than 60% below its peak reached 25 years ago when its chips were still dominating the personal computer boom before being undercut by a shift to smartphones a few years later.
The company's market value currently stands at about $108 billion – a fraction of the current chip kingpin, Nvidia, which is valued at $4.3 trillion.
The stake is primarily coming through U.S. government grants to Intel through the CHIPS and Science Act, which was initiated under the former President Joe Biden's administration as a way to foster more domestic manufacturing of computer chips and reduce dependence on overseas factories.
However, the Trump administration, which had regularly criticized the policies of the Biden administration, viewed the CHIPS Act as a needless giveaway and is now hoping to profit from the funding that had been pledged to Intel.
"We think America should get the benefit of the bargain," U.S. Commerce Secretary Howard Lutnick said earlier this week. "It’s obvious that it’s the right move to make."
Approximately $7.8 billion had been pledged to Intel under the incentives program, but only $2.2 billion had been funded to date. Another $3.2 billion of the government investment is coming through the funds from another program called "Secure Enclave."
Although the U.S. government can't vote with its shares and won't have a seat on Intel's board of directors, critics of the deal view it as a troubling cross-pollination between the public and private sectors that could harm the tech industry in various ways.
For instance, more tech companies may feel pressured to buy potentially inferior chips from Intel to curry favor with Trump at a time when he is already waging a trade war that threatens to affect their products in a potential scenario cited by Scott Lincicome, vice president of general economics for the Cato Institute.
"Overall, it’s a horrendous move that will have real harms for U.S. companies, U.S. tech leadership, and the U.S. economy overall," Lincicome posted Friday.
The 10% stake could also intensify the pressure already facing Tan, especially if Trump starts fixating on Intel's stock price while resorting to his penchant for celebrating past business successes.
Nancy Tengler, CEO of money manager Laffer Tengler Investments, is among the investors who abandoned Intel years ago due to the numerous challenges facing the Company.
"I don’t see the benefit to the American taxpayer, nor do I see the benefit, necessarily, to the chip industry," Tengler said while also raising worries about Trump meddling in Intel's business.
"I don’t care how good a businessperson you are, give it to the private sector and let people like me be the critic and let the government get to the business of government," Tengler said.
Although rare, it’s not unprecedented for the U.S. government to become a significant shareholder in a prominent company. One of the most notable instances occurred during the Great Recession in 2008, when the government injected nearly $50 billion into General Motors in exchange for a roughly 60% stake in the automaker, at a time when it was on the verge of bankruptcy. The government ultimately incurred a loss of approximately $10 billion after selling its stock in GM.
The U.S. government's stake in Intel aligns with Trump's push to bring production back to the U.S., which has been a focal point of the trade war he has been waging globally. By reducing the country’s dependence on chips manufactured overseas, the president believes the U.S. will be better positioned to maintain its technological lead over China in the race to develop artificial intelligence.
Even before gaining the 10% stake in Intel, Trump had been leveraging his power to reprogram the operations of major computer chip companies. The administration is requiring Nvidia and Advanced Micro Devices (AMD), two companies whose chips are powering the AI craze, to pay a 15% commission on their sales of chips in China in exchange for export licenses.
