Saving Struggling Intel: "U.S. Government Discussing 10% Stake Acquisition"

Bloomberg News reported on the 18th (local time) that the Donald Trump administration is discussing a plan to acquire a 10% stake in struggling U.S. semiconductor company Intel, which would make the government its largest shareholder.

Sources said the federal government is considering converting part or all of the subsidies provided to Intel under the CHIPS Act into an equity investment.

Reuters Yonhap News

Earlier, on the 14th, Bloomberg reported that the Trump administration was reviewing a plan to acquire a stake in Intel, and it has now been revealed that the size of the stake under consideration is 10%.

In relation to this, Kush Desai, a White House spokesperson, told Bloomberg that no agreement would be finalized until the administration makes an official announcement. The Department of Commerce, which oversees the CHIPS Act, and Intel did not respond to Bloomberg’s inquiries.

During the previous Joe Biden administration, in November of last year, the U.S. Department of Commerce announced it would provide up to $7.865 billion in direct funding to Intel to strengthen advanced semiconductor capabilities and create jobs. Including this, Intel was expected to receive a total of $10.9 billion in subsidies. As of the 15th, Intel’s market capitalization was $107.5 billion. If the full subsidy is converted, the government could acquire a 10% stake and become the largest shareholder.

CHIPS Act subsidies are paid out sequentially according to the progress of each project phase, and as of January this year, Intel had received $2.2 billion.

However, sources said that the specific size of the stake and whether the administration will actually proceed with the plan have not been determined. Bloomberg noted that it is unclear whether the $2.2 billion already received would be included in the equity investment, whether Intel has received any additional support since Donald Trump took office, or what the timeline for funding would be if the investment takes the form of an equity stake.

The potential acquisition of an Intel stake was discussed during a meeting between President Trump and Intel CEO Lip-Bu Tan on the 11th. On the 7th, President Trump had called for Tan’s resignation, alleging ties between the CEO and the Chinese government and companies. However, immediately after their meeting, Trump praised Tan, saying, “His success and rise are a remarkable story.”

The Trump administration’s review of acquiring an Intel stake is similar to the recent U.S. Department of Defense announcement that it would invest $400 million in rare earth producer MP Materials to acquire 15% of its preferred shares.

Following news last week of the federal government’s review of acquiring an Intel stake, Intel shares had risen for five consecutive days, but closed down 3.66% on this day.