US takes 10% stake in Intel amidst tech roadmap concerns and historic $18.8bn loss

The US government is acquiring a 10% stake in Intel, following a $2bn investment by SoftBank. The move comes after Intel's new CEO, Lip-Bu Tan, was asked to resign due to ties with China. The acquisition aims to strengthen US industrial independence in semiconductors, a critical technology for the country's sovereignty. Intel faces major obstacles, including a fragile technology roadmap and difficulty attracting customers for its new factories, leading to an historic loss of $18.8bn in 2024.

The U.S. government has acquired a 10% stake in Intel, valued at approximately $10 billion, through a $8.9 billion equity investment. This move is part of a broader strategy by the Trump administration to exert greater control and influence over critical U.S. technology firms. The agreement ties into the CHIPS and Science Act, a legislative initiative passed under the Biden administration to incentivize domestic semiconductor production [1].

The investment is financed by $5.7 billion in previously awarded CHIPS grants that have not yet been disbursed, as well as $3.2 billion from the Secure Enclave program. This shift in policy from cash grants to direct ownership allows the government a more tangible influence over the company’s strategic direction and performance [1].

Intel shares surged 5.5% following the announcement, signaling positive investor sentiment. However, critics of the deal remain unconvinced of its long-term benefits. Former leaders of the Commerce Department’s Chips program noted that the agreement does not address a key challenge for Intel: attracting foundry customers [1]. The company’s struggle to expand its role in semiconductor manufacturing beyond its own product lines remains a significant hurdle.

The decision marks a broader trend under the Trump administration, which has shown a growing willingness to intervene in major corporate agreements. President Trump has emphasized the importance of such deals, stating that they help secure American economic interests and technological leadership. “We do a lot of deals like that,” he said. “I’ll do more of them” [1].

This arrangement also raises questions about the balance between government support and corporate independence. While the U.S. government is now a major shareholder in Intel, it remains to be seen how this will affect the company’s operational autonomy and its ability to compete globally.

The acquisition comes amidst reports that Intel’s new CEO, Lip-Bu Tan, is being asked to resign due to alleged ties with China. Tan, a Malaysian-born U.S. citizen, was appointed in March to revive Intel, which has received billions in U.S. funding to boost domestic chip production. Republican Senator Tom Cotton cited reports that Tan invested in hundreds of Chinese companies, some allegedly linked to China's military. Intel defended Tan, affirming its commitment to U.S. national security [3].

In addition to the U.S. government’s investment, Japanese tech giant SoftBank Group has announced a $2 billion stake in Intel. This investment will make SoftBank the sixth-largest Intel shareholder [2]. The deal comes amidst reports that the Trump administration is in discussions to take a 10% stake in Intel, which could see the U.S. government become the struggling chipmaker’s largest shareholder [2].

As the semiconductor industry continues to play a central role in national security and economic competitiveness, such government-corporate partnerships are likely to become more common. Intel’s latest deal sets a precedent for how state and private interests may intersect in the years to come.

References:
[1] https://www.ainvest.com/news/government-buys-10-intel-stake-10-billion-equity-investment-2508/
[2] https://sherwood.news/business/intel-to-receive-usd2-billion-investment-from-softbank-trump-administration/
[3] https://www.firstpost.com/web-show/firstpost-america/trump-demands-malaysian-born-intel-ceo-lip-bu-tan-resign-over-china-links-firstpost-america-n18g-vd1368597/