Recent rumors that the U. S. government plans to buy a stake in Intel Corp. have finally been confirmed. Intel must cede its stake to the US government in return for funding from the chip and Science Act, United States Department of Commerce Lutnik said on the 19th. The White House confirmed on the same day that the deal would allow the US government to take a 10 per cent stake in Intel and that the commerce department was“Finalising” the details. It is widely believed in the Western media that a deal would make the US government Intel’s largest shareholder. The case could also serve as a model for other Donald Trump government investments and usher in a new era of government influence over big companies. But some media outlets, including the New York Times, say that while the Donald Trump administration is understandably considering a big investment in the troubled chip giant, but the move could have big implications for the technology industry, the artificial intelligence race and the federal government’s relationship with private companies.
Levitt, the White House Press Secretary, said Monday that the United States Department of Commerce was moving forward with the government’s purchase of a 10 percent stake in Intel Corp. . (source: White House web site)
“If we’re gonna give you this money, we’re gonna be part of it.”
“If we put money in, we should get equity,” Lutnik said on CNBC on Thursday, criticising the chips and Science Act, signed into law by former president Biden, as “Practically giving Intel money for free”, “If we’re going to give you this money, we’re going to be part of it,” he said, adding that the administration did not want to control the company, no potential arrangement would give the government voting or governance rights at Intel.
On the same day, White House Press Secretary Levitt confirmed that the United States Department of Commerce was moving forward with the 10% government stake deal and that Secretary Lutnick was working on the details, “The President wants to put America’s needs first from both a national security and an economic perspective.”.
Intel did not comment on the plan. But last week a company spokesman said it “Strongly supports President Donald Trump’s efforts to strengthen our leadership in technology and manufacturing”.
Bloomberg quoted sources as saying on the 18th reported that the federal government will consider Intel from the“Chip and Science Act” in part or all of the grant to convert into equity. The company had planned to raise a total of $10.9 bn from such allocations, roughly the same amount as a 10 per cent stake.
The BBC has described swapping existing government grants for shares as “Highly unusual” and could help Intel compete with rivals such as Nvidia, Samsung and TSMC, especially in the booming market for artificial intelligence chips. Vincent Fernando, founder of singapore-based investment consultancy 01, said it made sense for the government to take a stake in Intel, given its key role in US semiconductor production. Washington needs to wean key industries such as chip manufacturing and defence equipment from dependence on foreign suppliers. However, he also said that while the move could give Intel a boost, it could also“Create uncertainty for any company that has participated in or is considering participating in the federal grants program”.
US Treasury Secretary: Not for Intel
A day before the White House confirmed it was considering buying a stake in Intel, Intel and softbank announced that softbank would invest $2bn in the company. The investment will give the Japanese company a stake of about 2 percent in Intel, making it the company’s sixth-largest shareholder, the Wall Street Journal reported, citing S & P Global markets financial data.
But the New York Times points out that Intel’s problems can not be solved with money alone. What the company needs most is customers and innovative new products. It lags far behind Advanced Micro Devices and Qualcomm in PC chips, behind Nvidia in artificial intelligence processors and behind TSMC in its contract manufacturing division.
According to CNBC, Intel has struggled to capitalise on the AI boom in advanced semiconductors and has invested heavily in manufacturing expansion, but has yet to win important customers. Intel said last autumn it had secured nearly $8bn from the chip and Science Act to build a new plant in Ohio. But in July, Chen Liwu, Intel’s chief executive, said the pace of new plant construction would be slowed according to market conditions.
“Even if TSMC offers a better product, will apple and Nvidia be forced to choose Intel to keep the US government happy? To what extent will the U. S. Government seek to intervene in industrial policy?” Asked the New York Times on the 19th.”. Asked if buying a stake in Intel would mean persuading American companies to buy chips from the technology giant, the United States Secretary of the Treasury said in a CNBC interview on the 19th, according to Axios news website and other US media reports, “The last thing we would do is take a stake and then try to drum up business for it”, and any investment in Intel is intended to“Help stabilise the company’s chip production in the US”.
“The U.S. government is becoming more aggressive in the strategic area.”
On the 19th, Lutnick hinted that the Donald Trump administration might seek similar deals with other companies funded by the chip and Science Act, CNBC reported. People familiar with the matter said the United States Department of Commerce was studying how to exchange the grants for stakes in companies such as Micron, TSMC and Samsung, Reuters reported. TSMC said it would“Not answer hypothetical questions”, according to Taiwan’s Lianhe daily.
However, Bloomberg said that while TSMC and Samsung are using the chips and Science Act to expand their operations in the United States, allowing U.S. companies like Intel to produce cutting-edge chips at home, has been a priority for both the Donald Trump and Biden administrations. Donald Trump’s team held preliminary talks with TSMC earlier this year about the possibility of running an Intel plant, but TSMC has pulled out of the arrangement. Administration officials have also raised internally the possibility of seeking an investment from the United Arab Emirates.
“The US government is becoming more aggressive in the strategic area,” Bloomberg said, adding that the Donald Trump administration had reached an agreement with Nvidia and AMD to allow the latter to export AI chips to China, on condition that the government take a 15 per cent cut of its sales to China. In July, the Pentagon became the largest shareholder in mountain pass materials, a US rare earth producer, after announcing a $400m stake in the company. In June, the U. S. government won so-called“Golden shares” in a deal to approve the sale of U. S. Steel to Japanese steel companies. Reuters said this was to prevent the companies from reducing or postponing promised investments without the President’s consent, moving production or jobs outside the United States, or closing or idling factories before a certain time.
CNN said Donald Trump’s twin goals of reviving American manufacturing and consolidating the country’s leadership in technology had been a cornerstone of his second term as president. But the Wall Street Journal says the government’s intervention in the chip industry has crossed the line. It must be careful not to undermine the market model of America’s technology industry.