Trump Announces U.S. Secures 10% Stake in Intel Amid Challenges

President Donald Trump revealed on Friday that the U.S. government has acquired a 10% stake in struggling tech giant Intel. This deal comes shortly after Trump criticized Intel’s CEO, Lip-Bu Tan, labeling him as unfit for the role. The acquisition involves converting $11.1 billion in previous funds into 433.3 million shares of non-voting stock priced at $20.47 each, a discount compared to Intel’s closing price of $24.80 on that day.

This stake positions the U.S. government among Intel’s largest shareholders at a time when the company is undergoing significant restructuring, including plans to lay off more than 20,000 workers. Intel has faced a series of challenges and operational missteps over recent years, struggling to maintain its competitive edge against rivals like Nvidia.

The current market value of Intel is approximately $108 billion, a stark contrast to Nvidia’s valuation of $4.3 trillion. The government’s investment is part of broader efforts to boost domestic semiconductor manufacturing, which began under the CHIPS and Science Act. The initiative aims to reduce reliance on overseas production and strengthen the U.S. technology sector.

Despite previous criticism, Trump praised Tan as a “highly respected” CEO in his announcement, reflecting a shift in tone following Tan’s public commitment to the U.S. in a letter to employees. In response to Trump’s backing, Tan expressed gratitude for the government’s confidence and emphasized the importance of advancing U.S. technology leadership.

The government’s stake in Intel primarily stems from grants associated with the CHIPS program, which was initiated under the Biden administration. Although Trump’s administration has frequently denounced Biden’s policies, it now seeks to capitalize on this funding. U.S. Commerce Secretary Howard Lutnick stated earlier this week, “We think America should get the benefit of the bargain.”

Critics of the deal raise concerns regarding the potential implications of government involvement in private business. Some fear that tech companies might feel pressured to use Intel’s chips to maintain favorable relations with the administration, particularly as Trump continues his trade war with China. Scott Lincicome, vice president of general economics at the Cato Institute, described the arrangement as a “horrendous move” that could adversely affect U.S. tech leadership and the economy.

The deal may also increase scrutiny on Tan, particularly if Trump begins to focus on Intel’s stock performance. Investor Nancy Tengler, CEO of Laffer Tengler Investments, expressed skepticism about the benefits for American taxpayers and the chip industry, urging that the government should refrain from intervening in business operations.

Historically, government stakes in major companies are rare but not unprecedented. A notable example occurred during the 2008 financial crisis when the U.S. government invested nearly $50 billion in General Motors, acquiring a roughly 60% stake. Ultimately, this investment resulted in a loss of approximately $10 billion upon selling the stock.

As the U.S. government navigates its new role as a significant shareholder in Intel, it aligns with Trump’s overarching strategy to enhance domestic production capabilities. By reducing reliance on foreign chip manufacturers, the administration aims to bolster the country’s technological standing, particularly in the competitive landscape of artificial intelligence.