In a doubtlessly dramatic shift for company America and U.S. industrial coverage, the Trump administration is actively contemplating a plan to purchase a direct stake in Intel, one of many world’s largest and most strategically necessary chipmakers and the latest goal of fierce criticism from the president himself. These revelations, first reported by Bloomberg, triggered a right away surge in Intel’s inventory—leaping by as a lot as 8.9% in late Thursday buying and selling as traders responded to the potential of authorities intervention and assist for the beleaguered agency.
This sort of direct authorities funding in a tech large marks a notable departure from the extra hands-off method favored by practically all earlier U.S. administrations. Historically, federal assist for chipmaking got here primarily within the type of grants or subsidies, comparable to these allotted underneath the CHIPS Act. Trump’s method seems to favor direct fairness stakes, echoing latest White Home strikes in different sectors, such because the federal authorities taking a “golden share” whereas permitting Nippon Metal to accumulate U.S. Metal, and the Division of Protection shopping for $400 million in most well-liked shares in MP Supplies, a miner of rare-earth minerals.
Motivations and political context
The rationale for this transfer facilities on strengthening U.S. technological independence, with Intel being the one main semiconductor firm producing superior chips at scale contained in the U.S. Its deliberate mega-plant in Ohio—initially introduced in 2022 as a $20 billion funding—has confronted repeated delays amid struggles to compete with international leaders comparable to TSMC and Samsung.
The semiconductor sector is more and more seen as essential for every part from smartphones to weaponry. Trump’s critics typically cite “state capitalism,” however supporters argue direct assist for Intel is important for nationwide safety, technological management, and financial development, particularly as China, Taiwan, and South Korea pour assets into their very own chip industries.
The present scenario at Intel
Intel has been reeling from a sequence of setbacks. In 2024, its inventory misplaced 60% of its worth—the sharpest drop in its historical past. The corporate missed key alternatives in AI chips, and its foundry enterprise, aimed toward producing chips for different corporations, is reportedly struggling to win main shoppers.
Intel’s new CEO, Lip-Bu Tan, was named after the board ousted Pat Gelsinger final 12 months in an effort to speed up a turnaround. Tan has already scaled again ambitions for the Ohio plant, deferring expansions and taking a cautious, demand-driven method. His previous investments with Chinese language semiconductor corporations drew pointed criticism after a bombshell Reuters investigation in April—a lot in order that President Trump publicly referred to as for his resignation final week over allegations that Tan was “extremely conflicted” along with his ties to Chinese language entities. Tan held a gathering with Trump on the White Home since, which Trump referred to as “very attention-grabbing,” including that Tan has “a tremendous story.” Individuals conversant in the matter informed Bloomberg that the present funding plan stems from these crunch talks.
Earlier to Trump’s assertion, 4 former administrators of Intel printed a commentary unique to Fortune, saying the corporate was prone to retreat as America’s chips champion. After the president’s assertion, they advocated for a separation of Intel’s important “Foundry” enterprise that’s so core to nationwide safety.
Former Intel CEO Craig Barrett has since offered a commentary to Fortune about the right way to save the corporate, calling Intel “money poor” and unable to afford “investments within the capability wanted sooner or later to switch [semiconductor rival] TSMC or perhaps a cheap fraction of TSMC capability.” Barrett added that Intel most likely wants a money infusion of roughly $40 billion to be aggressive. “Realistically that funding is 100% of the [Chips] Act Capital grants so unlikely the [U.S. government] is the savior.” Bloomberg subsequently reported that the Trump administration was contemplating utilizing funds from the CHIPS Act to at the very least partially fund the acquisition of an fairness stake in Intel, citing folks conversant in the matter.
The White Home and Intel didn’t reply to Fortune‘s requests for remark.
For this story, Fortune used generative AI to assist with an preliminary draft. An editor verified the accuracy of the knowledge earlier than publishing.
