The agreement between the Trump administration and Intel Corp. that gave the federal government a 10 percent ownership stake in the company sparked a rally in its shares but drew fire from conservatives who say the government should not be in the business of owning companies.
“The United States of America now owns 10 [percent] of Intel, one of our great American technology companies,” Commerce Secretary Howard Lutnick posted on X.
“This historic agreement strengthens U.S. leadership in semiconductors, which will both grow our economy and help secure America’s technological edge.”
Intel, once the leading manufacturer of microchips, saw its stock price tumble from a high of more than $68 per share in 2021 to $23 on Aug. 21 over concerns that it has fallen behind its competitors as demand shifts to new markets such as artificial intelligence.
The company’s revenue fell from $79 billion in 2021 to $53 billion in 2024 because of slowing demand for its central processing units for personal computers and market share lost to its rival AMD, according to Forbes.
Following news that the government would buy a stake in the company, its shares rallied to more than $25 per share before falling back slightly by market close.
“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” Lip-Bu Tan, CEO of Intel, said in a statement.
“President Trump’s focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country’s economic and national security.”
Here are five things you need to know about the transaction.
1. Shares Are in Exchange for Awarded Grants
Approximately $8 billion in grants to Intel were already approved under the 2022 CHIPS Act, as part of $39 billion in subsidies to various tech companies intended to shift more chip production from Asia to the United States.
In return for the grants, Intel had pledged to invest in its manufacturing and research facilities in Arizona, New Mexico, Ohio, and Oregon.
Those grants will now be converted to equity, which advocates say gives the government the potential to earn profits. The terms of the deal state that the federal government would swap a total of more than $11 billion in grants already awarded to Intel for the 10 percent stake, at a discounted price of $20.47 per share.
Intel posted on its website that “the government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program.”
An additional $2.2 billion in federal grants has already been paid to the company.
2. Government Will Be Largest Shareholder
Although the government has agreed to vote in sync with company management, the deal would give the government substantial influence over Intel.
The investment will make the federal government Intel’s largest shareholder, with the second- and third-largest shareholders, BlackRock and Vanguard, owning 8.9 percent and 8.8 percent, respectively.
For perspective, 10 percent was the share of Southwest Airlines stock acquired by Elliott Investment Management in 2024, which was sufficient to enable the hedge fund to force the airline to revamp its ticketing and boarding policies. Those policies had set Southwest apart since its founding in 1967.
3. US Dependent on Taiwan for Advanced Semiconductors
One of the concerns that sparked government interest in Intel is the United States’ strategic dependence on semiconductors in its military hardware, as well as the economy in general.
A 2023 report by the U.S. International Trade Commission states that while 18 percent of global semiconductor production capacity is located in Taiwan, it accounts for 92 percent of the world’s high-end semiconductor capacity, leaving the United States heavily exposed to threats of a Chinese invasion of the island nation.
“Any disruptions to Taiwan semiconductor manufacturing—whether caused by pandemics, natural disasters such as typhoons or earthquakes, power or water shortages, factory shutdowns, or international conflict—would potentially have large impacts on global semiconductor supply,” the report states.
As part of the “Secure Enclave” initiative, in 2024, the Biden administration granted Intel up to $3 billion under the CHIPS and Science Act in an attempt to shift advanced semiconductor manufacturing to the United States.
4. Deal Praised by Liberals, Criticized by Conservatives
Taking an ownership stake in Intel is a new direction for the federal government. The deal received support among liberals and criticism among conservatives.
Sen. Bernie Sanders (I-Vt.) lauded the Intel deal, declaring in a statement that “if microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment.”
During deliberations of the CHIPS Act, Sanders and Sen. Elizabeth Warren (D-Mass.) proposed an amendment that would have tied grants to receiving equity or senior debt in recipient companies. But that amendment was rejected in the final bill.
Meanwhile, Sen. Rand Paul (R-Ky.) called the equity purchase a “terrible idea.”
“If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?” Paul posted on X.
Tad DeHaven, policy analyst for the Cato Institute, told The Epoch Times: “There’s a reason that the world, especially Western, relatively capitalist countries, have moved away from state ownership.
“It’s a recipe for political malfeasance; it’s a recipe for sclerosis; it’s a recipe for manipulation.
“And what happens with these state-owned companies is that it inhibits their growth and productivity and it harms their prospects in the marketplace.”
According to the World Resources Institute, while the Biden administration was active in pushing industrial policy, it did so largely through regulations and subsidies. This included the denial of drilling permits, tight emissions caps on greenhouse gases, and tax credits and subsidies to encourage the development of wind and solar energy and electric vehicles and discourage the production of coal, oil, and natural gas.
The Trump administration has focused on deregulation in energy and automotives, but at the same time, it has been pursuing public ownership of private companies. This includes the president’s Feb. 3 executive order to establish a multitrillion-dollar U.S. Sovereign Wealth Fund to “maximize the stewardship of … national wealth.”
It also includes the Pentagon plan in July to become the largest shareholder in MP Materials, a rare earths mining company, and the plan for the federal government to take a “golden share” in return for allowing Nippon Steel to buy U.S. Steel.
According to a Council on Foreign Relations report, a “golden share” is “a label commonly associated with European governments’ special stakes in defense companies, whereby a small equity stake entitles the government to veto certain corporate transactions.”
5. Deal Could Face Legal Challenges
An additional issue regarding the equity purchase is whether the federal government can legally buy shares in private companies without congressional approval. The government acquired large equity stakes during the mortgage crisis in carmakers, banks, and insurers, including Citibank, General Motors, Chrysler, and AIG.
But this was a temporary measure to address a “systemic” crisis, with the goal of shoring up bankrupt companies and returning them to private ownership once they got back on their feet. In that instance, the purchase of equity was authorized by Congress through the Emergency Economic Stabilization Act of 2008, which created the Troubled Asset Relief Program.
Without clear legal authority from Congress to buy shares of Intel, the deal could face challenges in court.
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