Trump's plan to convert US grants to chipmakers into government equity sparks support from Bernie Sanders, potential impact on Intel's stock.

Bernie Sanders backs Trump's plan to convert US grants to chipmakers into government equity, citing a right for taxpayers to receive a return on investment. This includes a $10.9 billion stake in Intel. Sanders expressed satisfaction, saying taxpayers should not provide billions in corporate welfare without receiving anything in return. Intel's stock has been fluctuating amid funding and equity speculation.

Senator Bernie Sanders (I-Vt) has expressed support for President Donald Trump's plan to convert U.S. grants to chipmakers into government equity in these firms. This includes a significant $10.9 billion stake in Intel INTC, reported Reuters [1]. Sanders stated, "If microchip companies profit from the generous grants they receive from the federal government, American taxpayers have a right to a reasonable return on that investment."

The proposal aligns with Sanders' previous amendment to the Chips Act, which required recipient companies to grant the Treasury a warrant, equity stake, or senior debt before receiving Commerce Department awards. Sanders expressed satisfaction, saying, "I am pleased the Trump administration agrees with the amendment I proposed three years ago." He added that taxpayers should not provide billions in corporate welfare to large, profitable corporations like Intel without getting anything in return [1].

The announcement comes at a time when Intel's stock has been experiencing significant fluctuations. The company's shares plunged by nearly 7% during after-hours trading on Wednesday after reports emerged of the chipmaker seeking additional investors following a $2 billion capital injection from SoftBank Group SFTBY. This was coupled with speculation about potential U.S. government equity involvement [1].

Commerce Secretary Howard Lutnick clarified that any possible arrangement would not grant the government voting power or governance rights in Intel. "..we're just converting what was a grant under Biden into equity for the Trump administration, for the American people," stated Lutnick [1].

The Trump Administration has also made news for its unique deal with Nvidia Corporation NVDA and Advanced Micro Devices, Inc. AMD. Earlier in August, billionaire entrepreneur Mark Cuban praised Trump’s controversial deal, which involved a 15% revenue-sharing agreement with Nvidia and AMD, calling it a progressive form of taxation [1].

However, entrepreneur and “Shark Tank” investor Kevin O’Leary expressed his disapproval of the potential government stake in Intel, stating that entrepreneurs are what have made the technology sector great and the U.S. government should stay out [1].

The potential investment in Intel is not without controversy. Analysts warn that the government support could erode the market presence of overseas competitors such as Samsung and TSMC. The move is seen as a push to steer U.S. big tech firms toward Intel, which has been struggling with financial troubles and has seen its foundry business run at a loss every quarter since early 2022 [3].

Intel's CEO, Lip-Bu Tan, has met with President Donald Trump to discuss the potential investment. The Trump administration is weighing the use of funds from the CHIPS Act to buy into Intel, aiming to bolster the ailing firm seen as America's last hope for domestic chip manufacturing [3].

The US semiconductor industry is undergoing a seismic shift, driven by the CHIPS Act, with Intel leading a $100 billion domestic manufacturing push backed by $52.7 billion in federal incentives [4]. The potential investment in Intel and other chipmakers is part of this broader effort to reshape the industry and ensure the U.S. remains competitive in the global semiconductor race.

References:
[1] https://www.benzinga.com/markets/tech/25/08/47252227/bernie-sanders-pleased-with-trumps-plan-to-take-stakes-in-intel-other-chipmakers-american-taxpayers-have-a-right-to
[2] https://finance.yahoo.com/news/trump-eyes-us-government-stakes-222031411.html
[3] https://www.ainvest.com/news/government-stake-intel-chipmakers-chip-shortage-crisis-2508/
[4] https://www.ainvest.com/news/government-industrial-policy-intel-turnaround-catalyst-reshoring-shareholder-creation-2508/