US Secretary of Commerce Howard Lutnick announced on Friday that Washington will acquire a 10% ownership stake in Intel.
“This historic agreement strengthens American leadership in semiconductors. It will grow our economy and secure our technological edge,” Lutnick wrote on X. He posted the statement alongside a photo of himself with Intel CEO Lip-Bu Tan.
President Donald Trump revealed the deal earlier in the Oval Office. He called it “a great deal for them.”
Shares of the Santa Clara-based chipmaker rose more than 5% on Friday.
Intel confirmed that the US government will invest $8.9bn (£6.6bn) in its common stock.
Grants redirected to fund investment
Intel said the funds will come from grants already approved but not yet distributed. This includes money promised under the CHIPS and Science Act, passed during President Joe Biden’s administration.
“As the only semiconductor company that conducts leading-edge R&D and manufacturing in the US, Intel is committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s push for domestic chip production. He said it fuels “historic investments in an industry vital to economic growth and national security.”
The CHIPS Act aims to restore semiconductor manufacturing within the United States.
Intel falls behind rivals
Intel has struggled to expand its chip production capacity. It lags behind Nvidia, whose market value has surpassed $4tn while Intel’s remains near $100bn.
Once a Silicon Valley leader, Intel missed the mobile technology boom. It also lost ground in artificial intelligence, where Nvidia dominates.
Trump pressures Intel CEO
Trump recently demanded Tan’s resignation. He accused the Intel chief of having questionable ties to China.
The president called Tan “highly conflicted” over alleged investments in companies linked to the Chinese military.
Tan rejected the accusations as “misinformation” in a note to staff. He said he had always followed the law and ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. US law permits investment in Chinese firms.
Trump’s criticism followed a letter from Republican Senator Tom Cotton to Intel’s board. Cotton questioned whether Intel could safeguard taxpayer money and comply with national security rules.
After the dispute, Tan visited Trump at the White House.
White House hails innovative approach
Press Secretary Karoline Leavitt described the deal as “a creative idea that’s never been done before.”
Reports said the Trump administration also required Nvidia and AMD to give Washington 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, compared the Intel stake to previous grant funding.
“It serves the same purpose,” Feldgoise said. “It reflects stronger government involvement in markets to secure economic and security goals. The aim is regaining leadership in semiconductor manufacturing.”
The move is rare in modern times but not without precedent.
Historical examples of government stakes
During the 2008 financial crisis, Washington took a majority stake in General Motors as bankruptcy loomed. The government later exited, taking a $10bn loss.
Feldgoise noted that Trump’s administration used a similar approach earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That agreement faced scrutiny after it emerged that the Department of Defense relied on a Cold War-era law to bypass procurement rules.
