US Secretary of Commerce Howard Lutnick announced on Friday that Washington will acquire a 10% 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 shared the post with a photo of himself alongside Intel CEO Lip-Bu Tan.
President Donald Trump confirmed the deal earlier in the Oval Office. He described it as “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 stake
Intel said the investment will come from grants already approved but not yet distributed. That includes funds allocated under the CHIPS and Science Act, passed during President Joe Biden’s administration.
“As the only semiconductor company conducting leading-edge R&D and manufacturing in the US, Intel remains 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 drives “historic investments in an industry critical for economic growth and national security.”
The CHIPS Act was designed to bring semiconductor manufacturing back to the United States.
Intel falls behind competitors
Intel has struggled to expand chip capacity. It trails Nvidia, whose market value has climbed past $4tn while Intel’s remains near $100bn.
Once a Silicon Valley leader, Intel missed the rise of mobile technology. It also fell behind in artificial intelligence, where Nvidia dominates.
Trump pressures Intel CEO
Trump recently demanded Tan’s resignation. He accused the Intel chief of having problematic ties to China.
The president described Tan as “highly conflicted” over alleged investments in firms linked to the Chinese military.
Tan rejected the claims as “misinformation” in a note to staff. He said he always acted within the law and ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. US law allows investment in Chinese companies.
Trump’s criticism followed a letter from Republican Senator Tom Cotton to Intel’s board. Cotton questioned Intel’s ability to manage taxpayer money responsibly and comply with security regulations.
After the dispute, Tan met Trump at the White House.
White House hails groundbreaking move
Press Secretary Karoline Leavitt described the deal as “a creative idea that’s never been done before.”
Reports said the Trump administration also ordered 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 government grant funding.
“It serves the same purpose,” Feldgoise said. “It shows stronger government involvement in markets to secure economic and security goals. The aim is regaining leadership in semiconductor production.”
The move is rare today but not without precedent.
Historical context of state stakes
During the 2008 financial crisis, Washington took a majority stake in General Motors as bankruptcy loomed. The government later exited, recording a $10bn loss.
Feldgoise noted that Trump’s administration followed a similar path earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That agreement drew scrutiny after it emerged the Department of Defense relied on a Cold War-era law to bypass procurement rules.
