US Secretary of Commerce Howard Lutnick announced on Friday that Washington will acquire a 10% holding in Intel.
“This historic agreement strengthens American leadership in semiconductors. It will boost our economy and secure our technological edge,” Lutnick wrote on X. He shared the message alongside a photo with Intel CEO Lip-Bu Tan.
President Donald Trump revealed the deal earlier in the Oval Office. He called it “a great deal for them.”
Shares of the Santa Clara-based chipmaker climbed more than 5% on Friday.
Intel confirmed that the US government will invest $8.9bn (£6.6bn) in its common stock.
Money redirected from earlier grants
Intel said the funds will come from grants already awarded but not yet disbursed. 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 focus on domestic chipmaking. He said it drives “historic investments in an industry vital to security and growth.”
The CHIPS Act aims to bring semiconductor production back to the United States.
Intel falls behind in competition
Intel has faced setbacks in expanding chip capacity. It has fallen far behind Nvidia, whose market value has soared past $4tn while Intel’s sits near $100bn.
Once a Silicon Valley pioneer, Intel missed the mobile technology boom. It also struggled to lead in artificial intelligence, where Nvidia dominates.
Trump turns up pressure on Intel boss
Trump recently attacked Intel and demanded Tan’s resignation. He accused the CEO of having troubling ties to China.
The president called Tan “highly conflicted” over alleged investments in companies linked to the Chinese military.
Tan dismissed the accusations as “misinformation” in a note to staff. He defended his record, saying he had always followed strict legal and ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. US law allows citizens to invest in Chinese companies.
Trump’s criticism followed a letter by Republican Senator Tom Cotton to Intel’s board. Cotton questioned whether the company could protect taxpayer funds and comply with security rules.
After the clash, Tan visited Trump at the White House.
White House calls deal groundbreaking
Press Secretary Karoline Leavitt described the agreement as “a creative idea that’s never been done before.”
Reports said the Trump administration also required 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 earlier 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 chip production.”
The deal is rare in modern times but not without precedent.
Past cases of government stakes
During the 2008 financial crisis, Washington took a majority share in General Motors as bankruptcy loomed. The government later exited, recording a $10bn loss.
Feldgoise said the Trump administration applied a similar approach earlier this year with MP Materials. The Nevada-based firm extracts rare earth metals.
That deal faced scrutiny from watchdog groups after it was revealed that the Department of Defense used a Cold War-era law to bypass procurement rules.
