Trump Administration Acquires 10% Stake in Intel to Prevent Wafer Fabrication Sale

Intel's Chief Financial Officer (CFO) recently revealed that the Trump administration's investment in the company was aimed at preventing the sale of its manufacturing division. The administration, through an agreement, converted 89 billion dollars in federal funding from the CHIPS and Science Act into equity, acquiring a 10% stake in Intel and becoming its largest single shareholder. Additionally, the government obtained a five-year warrant that allows it to purchase an additional 5% of Intel's shares at 20 dollars per share if the company's wafer fabrication business falls below 51% ownership.

The CFO expressed that Intel is unlikely to relinquish control over its wafer fabrication business, and the warrant is not expected to be exercised. "I believe that from the government's perspective, they are consistent with this, they do not want to see us divest or sell this business to others," the CFO stated. The CFO also mentioned that Intel received 57 billion dollars in government funding on August 28. The remaining 32 billion dollars in investment has not yet been disbursed and will depend on whether Intel meets the conditions set by the Department of Defense.

Intel has been under pressure to sell its loss-making wafer fabrication business, which is struggling to compete with Taiwan Semiconductor Manufacturing Company (TSMC). According to Intel's financial report released in early 2025, the business incurred a loss of 134 billion dollars over the 12 months ending December 2024. Analysts from Citigroup and Bank of America have repeatedly called for Intel to divest its wafer fabrication business, with Citigroup's senior semiconductor analyst continuously criticizing the business and suggesting that Intel should "exit the foundry business" to improve its financial situation. At the end of last year, there were reports that Qualcomm had expressed interest in acquiring Intel.

In December of last year, Intel's board of directors removed the company's CEO. The board believed that the CEO's ambitious and costly plans had failed to reverse Intel's lagging position in the foundry business, further fueling expectations that the company might eventually abandon the business. The CFO explained that the warrant can be seen as "a small friction to prevent us from sliding in a direction that I ultimately believe the government does not want us to go."

The CFO also stated that converting government funds into equity effectively ensures that Intel can secure the cash. Direct government equity ownership can also incentivize potential customers to view Intel from "different levels." The CFO added that Intel has made good progress in fundraising recently. The company recently sold 10 billion dollars worth of shares in its autonomous driving technology company Mobileye and is expected to complete a deal with private equity firm Silver Lake Capital to sell a 51% stake in its programmable logic device manufacturing division Altera within a few weeks. On August 18, SoftBank Group announced that it would acquire 20 billion dollars worth of Intel shares.

Following the announcement of the deal with Intel, Trump posted on social media, "I didn't spend a dime on the Intel share deal, its value is approximately 110 billion dollars, and all the proceeds go to the United States." He also stated, "I will continue to achieve such deals for our country. I will also help companies that achieve such profitable deals with the United States." He emphasized that he "likes" to see these companies' stock prices rise, which can "make the United States richer" and "create more jobs for the United States."

Economists have noted that the risk in semiconductor competition lies in the possibility that investments may be wasted if economic conditions do not support the establishment of the industry. The key to government intervention policies is to measure the size of the "return" and "risk." If a large amount of money is invested in semiconductor manufacturing equipment, but the country lacks the necessary skilled labor to operate it, then these investments would be meaningless.

This administration has taken a series of economic intervention measures targeting the private sector. In June, the Trump administration introduced the "golden share" mechanism when approving the acquisition of a U.S. steel company by Nippon Steel, granting the U.S. government veto power over major decisions through national security agreements. In July, the Department of Defense invested 4 billion dollars in preferred stock in U.S. rare earth producer MP Materials. This transaction made the Department of Defense the company's largest shareholder, with a stake of approximately 15%. Additionally, Trump successfully brokered a deal to extract a 15% share of profits from some semiconductor sales to China.

White House economic advisor Kevin Hassett stated this week that acquiring Intel's shares is "like paying a down payment for a sovereign wealth fund, which many countries have." He noted that while it is not common, the U.S. government's involvement in large companies is not unprecedented. During the financial crisis, the U.S. government held shares in Fannie Mae and Freddie Mac. He added that this action is part of the government's strategy, which also includes using tariffs to encourage more companies to bring production back to the U.S.

Hassett stated that Intel is "a very special case because the CHIPS Act provides massive funding support," but Trump "has clearly stated during his campaign that he believes it would be a good thing if the U.S. could eventually establish a sovereign wealth fund. Therefore, I believe that in the future, at some point, there will be more similar deals in this industry or other industries."