US government to acquire nearly 10% stake in Intel as part of President Trump's plan to boost American chip manufacturing

Intel has confirmed widely reported plans that it intends to sell nearly 10 percent of its shares to the U.S. government under a new $8.9 billion agreement with the Trump administration aimed at expanding American semiconductor production.

The deal gives the American government a direct equity stake in the struggling iconic chipmaker, and comes as part of President Trump’s much publicized push to strengthen domestic manufacturing.

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The U.S. will purchase 433.3 million shares of Intel common stock at $20.47 each, equal to a 9.9 percent ownership position.

The funding will come from $5.7 billion in CHIPS and Science Act grants that had not yet been paid and $3.2 billion awarded under the Secure Enclave program.

With $2.2 billion in earlier CHIPS grants already received, Intel has now secured $11.1 billion in total government support.

Intel inside

“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” said Lip-Bu Tan, who became Intel CEO in March. “President Trump’s focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country’s economic and national security. We are grateful for the confidence the President and the Administration have placed in Intel, and we look forward to working to advance U.S. technology and manufacturing leadership.”

Howard Lutnick, U.S. Secretary of Commerce, said, “Intel is excited to welcome the United States of America as a shareholder, helping to create the most advanced chips in the world. As more companies look to invest in America, this administration remains committed to reinforcing our country’s dominance in artificial intelligence while strengthening our national security.”

The government’s equity position will be passive, with no board representation or governance rights. It will vote with Intel’s board on most shareholder matters, with limited exceptions.

A five-year warrant at $20 per share could expand the stake by another five percent if Intel’s ownership of its foundry business drops below 51 percent.

Claw-back and profit-sharing terms tied to earlier CHIPS funding will be removed under the agreement.

Microsoft CEO Satya Nadella said of the deal, “The decades-long partnership between Microsoft and Intel has pioneered new frontiers of technology and showcased the very best of American ingenuity and innovation. Intel’s continued investment in strengthening the U.S. semiconductor supply chain, supported by President Trump’s bold strategy to rebuild this critical industry on American soil, will benefit the country and broader technology ecosystem for years to come.”

Intel noted in a press release announcing the deal that since its founding in 1968 it has invested heavily in U.S. manufacturing and research, including $108 billion in capital and $79 billion in R&D in the past five years.

What do you think about the U.S. government becoming one of Intel’s largest shareholders? Let us know in the comments.

Image Credit: Intel