US Secretary of Commerce Howard Lutnick announced on Friday that Washington will take a 10% ownership stake in Intel.
“This historic agreement strengthens American leadership in semiconductors. It will grow our economy and protect our technological edge,” Lutnick wrote on X. He shared the message with a photo of himself alongside Intel CEO Lip-Bu Tan.
President Donald Trump revealed the deal earlier in the Oval Office. He described it as “a great deal for them.”
Shares of the Santa Clara-based chipmaker climbed more than 5% on Friday.
Intel confirmed that the US government will invest $8.9bn (£6.6bn) in its common stock.
Redirected grants finance the deal
Intel said the funds will come from grants already awarded but not yet delivered. That includes money provided under the CHIPS and Science Act, passed during President Joe Biden’s administration.
“As the only semiconductor company that conducts leading-edge R&D and manufacturing in the US, Intel is fully committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s focus on domestic chipmaking. He said it drives “historic investments in a vital industry for the economy and security.”
The CHIPS Act aims to bring semiconductor production back to the United States.
Intel loses ground to rivals
Intel has struggled in recent years to expand its production capacity. It has fallen far behind Nvidia, whose market value has surged beyond $4tn while Intel’s remains around $100bn.
Once a symbol of Silicon Valley, Intel failed to capitalise on mobile technology. It also lost momentum in artificial intelligence, where Nvidia now dominates.
Trump confronts Intel chief
Trump recently targeted Intel and called for Tan’s resignation. He accused the CEO of problematic links to China.
The president labelled Tan “highly conflicted” over alleged investments in firms connected to the Chinese military.
Tan rejected the allegations as “misinformation” in a note to employees. He defended his record, saying he had always acted within the law and ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. US law permits citizens to invest in Chinese companies.
Trump’s criticism followed a letter from Republican Senator Tom Cotton to Intel’s board. Cotton questioned whether the company could safeguard taxpayer funds and comply with security regulations.
After the controversy, Tan met Trump at the White House.
White House calls move unprecedented
Press Secretary Karoline Leavitt described the deal as “a creative idea that’s never been done before.”
Reports said the Trump administration also ordered Nvidia and AMD to hand over 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, compared the Intel stake to previous grant funding.
“It serves the same purpose,” Feldgoise said. “It shows stronger government involvement in markets to secure economic and security goals. The aim is regaining leadership in chip manufacturing.”
The move is unusual in modern times but has historical examples.
Historical government stakes
During the 2008 financial crisis, Washington took a majority stake in General Motors as it neared bankruptcy. The government later exited, recording a $10bn loss.
Feldgoise noted that Trump’s administration adopted a similar approach earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That agreement faced scrutiny from watchdog groups after it was revealed that the Department of Defense used a Cold War-era law to bypass procurement rules.
