The Trump administration is in talks to purchase a 10% share in Intel, potentially making the US the largest investor in the struggling chip manufacturer.
The federal government is thinking about investing in Intel by possibly converting some or all of the funds provided under the US Chips and Science Act into shares, according to anonymous sources. Intel is expected to receive $10.9 billion from the Chips Act for commercial and military production.
This sum is roughly sufficient to cover the planned contribution. A 10% share in the chip manufacturer at Intel’s present market worth would amount to about $10.5 billion.
The specific level of involvement and the White House’s choice to move forward with the proposal remain uncertain, according to sources.
Kush Desai, the White House spokesperson, declined to provide details about the talks, emphasizing that any agreement would not be confirmed until officially announced by the government. The Department of Commerce, responsible for the Chips Act, also refrained from commenting.
Intel did not provide a comment in response to the request.
The White House’s power also suggested that the government might change other Chips Act grants into ownership stakes. It is unknown if this proposal gained traction within the government or if officials talked about it with potentially impacted companies.
Intel gets a fresh boost?
Government aid may potentially revive Intel’s business, which is currently facing challenges such as flat sales, ongoing losses, and difficulty in reclaiming its technological edge in the industry.
The new CEO, Lip-Bu Tan, aims to revive the company by primarily concentrating on reducing expenses and reducing workforce.
Intel’s investors initially reacted positively to the government’s investment in the company, leading to the highest weekly share price since February. However, share prices dropped by over 3% on Monday following reports from Bloomberg.
Intel may not receive a larger government funding than anticipated if they utilize Chips Act money, possibly receiving a faster disbursement instead.
Intel had received $2.2 billion in grant disbursements by January, in line with the gradual disbursement plan for Chips Act participants like them.
Some aspects remain uncertain, such as whether the $2.2 billion would be part of the potential ownership stake. It is also unclear if the company has received further payments for its concession during Donald Trump’s presidency, and the timeline for when Intel would receive the funds from the shareholder is not specified.
The majority of the funding allocated by the Chips Act of 2022 was meant for firms affiliated with the Biden administration.
Trump is associated with both hatred and love.
Tan visited Trump at the White House last week to assist in setting the groundwork for talks with Intel.
The U.S. President had already raised concerns about the executive, requesting Tan to depart because of prior connections to China.
After the meeting, Trump commended the Intel CEO, describing his background as remarkable.
Tan is likely to continue in his position, even though he has faced criticism in the past, sources familiar with the matter reported last week.
Intel’s employees under Trump’s administration have been concerned about the company’s future ever since they acquired it. The leading company had fallen behind Taiwan Semiconductor Manufacturing, the global leader in producing small electronic parts used in various devices such as smartphones and artificial intelligence systems.
This makes it difficult to bring back chip manufacturing in the US following years of moving operations to Asia.
TSMC and Samsung are expanding their activities in the US, but having an American company like Intel produce cutting-edge chips on US soil has been a key focus for both the Trump and Biden administrations.
President Joe Biden’s administration officials have been considering lasting strategies, such as a potential union between Intel and GlobalFoundries.
Earlier this year, Trump’s team had initial discussions with TSMC about potentially running the Intel factories, but TSMC later backed out of the agreement.
Funds originating from the United Arab Emirates.
The Trump administration also considered the option of pursuing an investment from Intel in the United Arab Emirates, but it is uncertain if any of these discussions advanced beyond the initial stage.
If the Trump administration proceeds with a shareholder stake in Intel, it would align with a recent trend of increased government involvement in key industries.
Trump’s team reached a deal to get a 15% share of specific semiconductor sales to China and gained a “golden share” in United States Steel as part of an agreement to permit its sale to a Japanese competitor.
Intel’s plan aligns with the recent news from the Department of Defense, which disclosed its intention to invest $400 million in MP Materials, a U.S. rare earth producer, giving it a significant stake of around 15% in the company.
