Trump Vows to Make More Deals Like Intel Stake, Critics Slam Move as Federal Incursion

US President Donald Trump has expressed his support for the government's 10% stake in Intel, stating he will make deals like this "all day long" to bring more money and jobs to the US. The move has been criticized by some analysts and politicians, who see it as an incursion of federal involvement in the private sector. Intel's stock has a consensus Hold rating among Wall Street analysts, with an average price target of $22.17.

The Trump administration has announced a significant investment in Intel, securing a 10% stake in the technology giant. This move, which involves the U.S. government investing $8.9 billion in Intel's equity, has generated considerable interest and debate among investors and analysts.

Government Investment and Equity Stake

According to the agreement, the U.S. government will subscribe to 433.3 million shares of Intel stock at a price of $20.47 per share. This investment, totaling $8.9 billion, will be funded partly through the CHIPS Act, with $5.7 billion allocated from this source and $3.2 billion from the Secure Enclave Program. The Secure Enclave Program aims to ensure a domestic supply of advanced microchips for U.S. national security applications.

Market Reaction and Analyst Views

Intel's stock price initially rose by approximately 5.5% on the news of the government's equity stake. However, after the official disclosure of the details, the stock price fell by over 1% in after-hours trading. Analysts have been divided in their opinions on the impact of this investment. While some view it as a positive development, others point to Intel's fundamental challenges, such as the need to catch up technologically with Taiwan Semiconductor.

Daniel Morgan, Senior Portfolio Manager at Synovus Trust, stated that Intel needs to improve its technological capabilities to attract customers. He believes that Intel's issues extend beyond financial injections and that the company needs to compete more effectively in the semiconductor market.

Political and Market Implications

The investment in Intel marks a shift in the U.S. government's industrial strategy, moving towards a more hands-on approach to supporting critical infrastructure. This move has raised concerns about the potential for increased federal involvement in the private sector, which could introduce new political risks for companies.

U.S. Senator Bernie Sanders has expressed support for the initiative, highlighting the bipartisan consensus on the importance of reshaping domestic chip production. The agreement could set a precedent for future government investments in strategic industries, potentially leading to similar arrangements with other technology firms.

Conclusion

The Trump administration's investment in Intel is a significant development in the U.S. government's approach to industrial policy. While the move aims to strengthen domestic semiconductor manufacturing and create jobs, it has also sparked debate and raised questions about the balance between public ownership and corporate autonomy. As the deal remains under final review, investors and industry stakeholders will closely watch the implications for the future of U.S. manufacturing and global technology leadership.

References

[1] https://news.futunn.com/en/post/61026831/trump-the-us-government-should-acquire-10-of-intel
[2] https://finance.yahoo.com/news/intel-intc-stock-holds-21-015010467.html
[3] https://www.ainvest.com/news/trump-admin-equity-stake-intel-shift-industrial-strategy-2508/