US Secretary of Commerce Howard Lutnick announced on Friday that Washington will take a 10% ownership stake in Intel.
“This historic agreement strengthens American leadership in semiconductors. It will grow our economy and secure our technological edge,” Lutnick wrote on X. He shared the post with a photo alongside 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 Washington will invest $8.9bn (£6.6bn) in its common stock.
Government uses redirected grants
Intel said the investment will come from grants already approved but not yet delivered. That includes money pledged under the CHIPS and Science Act, which was passed during President Joe Biden’s administration.
“As the only semiconductor company that carries out leading-edge R&D and manufacturing in the US, Intel is deeply committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s focus on boosting domestic chipmaking. He said it drives “historic investments in an industry critical to both security and growth.”
The CHIPS Act was created to restore semiconductor production within the United States.
Intel struggles against rivals
Intel has faced setbacks in building new chip capacity. It has fallen far behind Nvidia, whose market value has surged past $4tn while Intel’s sits near $100bn.
Once a Silicon Valley leader, Intel failed to capitalise on the mobile revolution. It also lost ground in artificial intelligence, where Nvidia dominates.
Trump challenges Intel chief
Trump recently demanded Tan’s resignation. He accused the Intel boss of questionable links to China.
The president called Tan “highly conflicted” due to alleged investments in firms tied to the Chinese military.
Tan rejected the accusations as “misinformation” in a note to staff. He said he always operated within the law and followed 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 comments came after Republican Senator Tom Cotton raised concerns in a letter to Intel’s board. Cotton questioned whether Intel could manage taxpayer money responsibly and comply with security rules.
After the criticism, Tan visited Trump at the White House.
White House calls plan groundbreaking
Press Secretary Karoline Leavitt described the deal 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 past grant funding.
“It serves the same purpose,” Feldgoise said. “It shows stronger government involvement in markets to meet economic and security goals. The aim is regaining leadership in chip production.”
The move is rare today but not without historical examples.
Lessons from past state ownership
During the 2008 financial crisis, Washington took a majority stake in General Motors to prevent bankruptcy. The government later sold its shares, recording a $10bn loss.
Feldgoise noted that Trump’s administration pursued a similar approach earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That deal faced scrutiny from watchdog groups after it emerged that the Department of Defense used a Cold War-era law to bypass procurement rules.
