U.S. Government Eyes 10% Stake in Intel, SoftBank Invests $20 Billion

The United States government is considering a plan to acquire approximately 10% of the shares in Intel (INTC.US) using funds from the "Chips and Science Act." This move could potentially make the U.S. government the largest shareholder in the struggling chip manufacturer. According to White House officials and insiders, the federal government is exploring the possibility of converting the funds, which were originally planned to be disbursed in installments under the "Chips Act," into equity investments. The amount involved could cover the 109 billion dollars in commercial and military production subsidies that Intel has already been approved for. However, while the Trump administration is contemplating investing in Intel, Japan's SoftBank has already made a move—securing a 20 billion dollar investment deal.

Based on the current market value, a 10% stake in Intel is valued at approximately 105 billion dollars, which partially overlaps with the 22 billion dollars in initial funding that Intel has already received. The specific operational details and timeline for this plan have not yet been clarified. White House spokesperson Kush Desai declined to comment on the negotiation details, emphasizing that "any agreement is not final until it is officially announced." The U.S. Department of Commerce, which oversees the "Chips Act," also did not issue a statement, and Intel did not respond to requests for comment.

Insiders added that the government is also discussing the possibility of converting other "Chips Act" awards into equity, but it is unclear whether this idea has broad support or if it has been communicated with the companies in advance. Notably, the "Chips Act" funds were originally planned to be disbursed in installments based on project milestones. Converting these funds into equity could potentially shorten the time it takes for the funds to be available.

The background of these negotiations is complex. Since taking office, the Trump administration has viewed Intel as a key player in revitalizing the domestic semiconductor industry, as the company has fallen behind Asian competitors like TSMC. Although TSMC and Samsung have expanded their investments in the U.S., both administrations have prioritized the production of advanced chips by domestic companies. Previously, the Biden administration had explored the possibility of merging Intel with GFS, while the Trump team had discussed the possibility of TSMC taking over Intel's factories, but neither of these plans made significant progress. There were also internal discussions about bringing in capital from the United Arab Emirates, but the progress of this initiative is unclear.

If the equity acquisition plan proceeds, it will continue the Trump administration's recent trend of increased intervention in strategic areas. Previously, the administration has strengthened its control by requiring semiconductor companies to share 15% of their sales to China and by acquiring "golden shares" in U.S. steel companies. This approach is consistent with the Pentagon's recent announcement that it would acquire a 15% preferred stake in MP Materials, a rare earth company, highlighting Washington's capital allocation strategy in key supply chains.

It is worth noting that while the Trump administration is considering investing in Intel, Japan's SoftBank Group has already reached an agreement to invest 20 billion dollars in the U.S. chip manufacturer. According to the terms of the final securities purchase agreement, SoftBank will directly purchase Intel's common stock at 23 dollars per share, subject to standard transaction conditions. SoftBank's Chairman and CEO expressed that this investment demonstrates the company's commitment to "promoting the leading position of American technology and manufacturing." Intel's CEO emphasized that he has maintained a close working relationship with SoftBank's CEO for decades and thanked him for demonstrating confidence in Intel through this investment.

Currently, Intel is facing dual pressures of stagnant sales and continuous losses. The new CEO is attempting to turn the situation around by cutting costs and reducing the workforce. Although the news of government investment had previously driven Intel's stock price to its largest weekly gain since February, related reports on equity negotiations caused its stock price to drop by more than 3% during the week. However, following SoftBank's announcement of a 20 billion dollar investment agreement, Intel's after-hours stock price had risen by more than 5% by the time of publication.