In a deal that’s part creative accounting and part aggressive industrial policy, the US government is now the largest shareholder in Intel. The Trump administration announced an $8.9 billion investment for a 10 percent stake in the beleaguered chip giant, a move President Trump framed as a masterstroke for American tech leadership. But here’s the kicker: the government isn’t spending a single new taxpayer dollar; it’s simply converting grant money Intel was already promised into company stock.
Key Takeaways
- A “Creative” Investment: The US government is acquiring a 10 percent stake in Intel by converting $8.9 billion in previously awarded, but unpaid, grants from the CHIPS Act and Secure Enclave program. No new funds are being deployed.
- From Critic to Partner: President Trump, who once called the CHIPS Act a “horrible, horrible thing” and demanded the resignation of Intel’s CEO, is now championing the deal as a personal victory to secure US semiconductor manufacturing.
- Passive… For Now: Intel and the administration state the ownership will be “passive, with no Board representation,” but the government also secured a five-year warrant to buy another 5 percent stake if Intel’s control of its foundry business dips, giving it future leverage.
- A New Era of Intervention: This deal marks a dramatic policy shift, moving beyond subsidies to direct government ownership in a critical tech company, raising questions about corporate independence and the blurring lines between Washington and Silicon Valley.
The Art of the (Re)Deal
On Friday, President Trump confirmed that the US would become Intel’s partner, telling reporters, “I think it would be good having the United States as your partner.” While Intel’s announcement describes an “$8.9 billion investment in Intel common stock,” the money isn’t coming from a new government check. Instead, the deal is fiendishly simple: the government is taking funds it already owed Intel and calling it an “investment” in exchange for equity.
The funds consist of $5.7 billion in unpaid grants from the Biden-era CHIPS Act and another $3.2 billion from the Secure Enclave program. This “conversion of grants,” as Treasury Secretary Scott Bessent put it, instantly makes Washington Intel’s largest shareholder without opening the national wallet. In a post on Truth Social, Trump seemed to relish the arrangement, boasting, “The United States paid nothing for these shares.“
Chips, China, and a Change of Heart
This pivot is a stunning reversal for an administration that was, until recently, openly hostile to both the CHIPS Act and Intel’s leadership. Just weeks ago, Trump called for Intel CEO Lip-Bu Tan to “resign over his ties to China.” Now, Trump says he personally “negotiated this deal with Lip-Bu Tan, the Highly Respected Chief Executive Officer of the Company.”
The administration’s rationale is built on a foundation of economic nationalism and national security. Secretary Bessent stressed the need for the US to become self-sufficient and counter China’s tech influence, telling CNBC the goal is to stop a “single point of failure for the global economy,” a reference to the fact that 99% of advanced chips are made in Taiwan. Taking a stake in Intel, he argued, would help “stabilize the company for chip production here in the US.” The move follows other investments giving investors confidence, including a $2 billion stake recently purchased by SoftBank.
Uncle Sam, Venture Capitalist
This deal is far more than a financial reshuffling; it’s a signpost for a new, interventionist era of US industrial policy. The government is no longer just a regulator or a customer but an owner. This move blurs the line between government and business and follows a pattern of recent unorthodox actions, including taking a “golden share” in U.S. Steel and striking deals with Nvidia and AMD for a 15 percent cut of revenue from AI chip sales to China.
While Intel’s CEO Lip-Bu Tan expressed gratitude for the “confidence the President and the Administration have placed in Intel,” the arrangement is not without its critics and potential complications. Some experts suggest the unconventional deal could backfire, creating conflicts of interest. Furthermore, as The New York Times has noted, some legal experts believe the CHIPS Act may not even allow the government to convert grants to equity, potentially opening the deal to legal challenges down the road. For now, the move sent Intel’s stock soaring, but the president’s ominous promise that he’ll “do more of them” in the future suggests the tech industry should get used to having a new, very powerful investor at the table.
Why It Matters
This isn’t just about Intel. This deal signals a fundamental shift in the relationship between the US government and the tech industry, moving from arms-length subsidies to direct ownership. For decades, the American model championed free-market capitalism, with the government largely staying out of boardrooms. Now, in the name of national security and competing with China, Washington is picking winners and literally buying in.
The strategic ripples are immense. It sends a message to the entire semiconductor industry—and potentially others deemed “critical”—that partnership with, or even ownership by, the government is on the table. This raises profound questions about the future of corporate America. Does this level of state involvement make crucial companies more secure, or does it risk tying their fate to the volatile whims of politics, stifling the very innovation it’s meant to protect? As the US adopts a strategy that looks more like something from Beijing’s playbook, the world is watching to see if this new brand of American industrial policy will be a masterstroke or a misstep.
Conclusion
In a maneuver worthy of a seasoned dealmaker, the Trump administration has turned a government grant into the government’s largest stake in one of America’s most iconic tech companies. The move provides an immediate jolt of confidence for Intel and advances the administration’s “America First” industrial strategy. But as the dust settles, the long-term implications are what truly matter. All eyes will now be on whether this “passive” stake remains passive, if legal challenges surface, and just how many other companies may soon be getting a call from their new potential business partner: Uncle Sam.
Sources
- US government takes 10 percent stake in Intel in exchange for money it was already on the hook for
- With this deal, the U.S. government has become Intel’s largest shareholder
- The Trump administration’s big Intel investment comes from already-awarded grants
- Bessent on turning Intel’s CHIPS Act grants into a U.S. government stake in the company
- The Trump administration is aiming to take an equity stake in Intel, according to US commerce secretary Howard Lutnick. Experts say the unconventional deal could backfire.
- US Government’s Stake in Intel Under CHIPS Act
