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 protect our technological edge,” Lutnick wrote on X. He attached a photo of himself with 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 finance the deal
Intel explained that the funds will come from grants already approved but not yet paid. That includes money pledged 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 remains committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s emphasis on US chipmaking. He said it drives “historic investments in an industry vital to economic growth and security.”
The CHIPS Act aims to restore semiconductor manufacturing inside the United States.
Intel falls behind in global race
Intel has faced difficulties increasing its chip capacity. It has slipped behind Nvidia, whose market value has surged beyond $4tn while Intel’s stays near $100bn.
Once a Silicon Valley powerhouse, Intel missed opportunities in mobile technology. It also failed to lead in artificial intelligence, where Nvidia dominates.
Trump turns up pressure on Tan
Trump has recently demanded Tan’s resignation. He accused the Intel chief of having questionable ties to China.
The president described Tan as “highly conflicted” due to alleged investments in firms linked to the Chinese military.
Tan dismissed the accusations as “misinformation” in a note to staff. He stressed he had always acted within the law and followed ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. American law permits investment in Chinese companies.
Trump’s criticism followed a letter by Republican Senator Tom Cotton to Intel’s board. Cotton questioned whether Intel could safeguard taxpayer funds and comply with national security rules.
After the dispute, Tan met Trump at the White House.
White House praises unusual approach
Press Secretary Karoline Leavitt called the stake “a creative idea that’s never been done before.”
Reports said the Trump administration also ordered Nvidia and AMD to hand over 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, compared the deal to previous grant funding.
“It serves the same objective,” Feldgoise said. “It reflects stronger government involvement in markets to protect economic and security goals. The aim is regaining leadership in semiconductor manufacturing.”
The move is rare today but has historic parallels.
Earlier cases of state ownership
During the 2008 financial crisis, Washington took a majority stake in General Motors as bankruptcy loomed. The government later withdrew, taking a $10bn loss.
Feldgoise said the Trump administration followed a similar path earlier this year with MP Materials. The Nevada-based company extracts rare earth metals.
That deal drew criticism from watchdog groups after revelations that the Department of Defense relied on a Cold War-era law to bypass procurement rules.
