Trump Administration Discusses Taking 10% Stake in Intel

Federal officials are considering the move because Intel, the last leading-edge chipmaker in the United States, has been struggling.

The Trump administration has discussed taking a 10 percent stake in Intel as part of a government-backed effort to revive the troubled U.S. chipmaker and bolster domestic semiconductor manufacturing, said three people familiar with the talks who spoke on the condition of anonymity.

The discussion has included converting $10.86 billion in recent federal grants into equity in Intel, which is worth about $100 billion, two of those people said.

The proposal would be among the largest government interventions in a U.S. company since the rescue of the auto industry after the 2008 financial crisis. To prevent the collapse of Chrysler and General Motors, the government poured tens of billions of dollars into the companies and helped them reorganize. The maneuver is believed to have saved more than a million auto industry jobs.

While the United States is not facing a similar economic threat today, the Trump administration has been unusually aggressive in taking stakes in businesses. The federal government took a “golden share” in U.S. Steel this year as part of a deal to approve its sale to Japan’s Nippon Steel.

The Biden administration awarded the Intel grants under the 2022 CHIPS and Science Act, a bipartisan law that provided $39 billion to subsidize chipmaking facilities and reduce U.S. reliance on foreign production of the tiny, critical electronics that power everything from iPhones to fighter jets.

Intel’s grants were earmarked for projects in Arizona, New Mexico, Ohio and Oregon. As the nation’s last leading-edge chipmaker, the company was also given a multibillion-dollar contract to make semiconductors for the Defense Department.

It is unclear how the U.S. government would convert a financial award into an equity stake and whether the Trump administration would look for similar arrangements with other recipients of CHIPS Act money.

It’s also unclear how a government stake in Intel would solve the company’s problems. Its manufacturing business has struggled to find customers. To make the investment work, the Trump administration would need to lean on companies like Apple, Nvidia and Qualcomm, analysts and industry advisers said.

If the discussions pan out, a deal is likely to need approval by Intel’s board of directors. It could also face a challenge from shareholders or others in the industry concerned about its legality.

Earlier this year, the administration discussed creating a consortium of investors that could include private equity firms and other tech companies to take control of Intel’s manufacturing business. During those discussions, Intel’s chairman, Frank Yeary, proposed transferring those operations to the Taiwan Semiconductor Manufacturing Corporation, or TSMC, the world’s dominant chipmaker. But Mr. Trump is opposed to a foreign operator, a person close to the administration said.

The deal discussions were previously reported by Bloomberg and The Wall Street Journal.

Late Monday, Intel said it had received a $2 billion investment from SoftBank Group, the Japanese conglomerate. SoftBank said it would pay $23 per share for Intel common stock. Shares in Intel, which closed at $23.66 on Monday, rose 4 percent in after-hours trading.

Two administrations in Washington have viewed Intel as critical to national security. Most leading-edge chip production is done by TSMC, and Taiwan could one day be under threat of a Chinese takeover.

As tensions between the United States and China have risen over the past decade, the Trump and Biden administrations have tried different strategies to bring more chip manufacturing to the United States. The Biden administration pushed the CHIPS Act to provide subsidies for plants, while the Trump administration has threatened to place tariffs on chips made overseas.

Since receiving its grants from the Biden administration last year, Intel has been under duress. The company fired its chief executive, Pat Gelsinger, in December as revenues declined while costs mounted. The company had missed the boom in artificial intelligence chips and was struggling to develop a new chipmaking process.

In March, the company hired Lip-Bu Tan, a well-regarded semiconductor investor and manager, to fix the business. Mr. Tan outlined a plan to cut staff, develop a new A.I. strategy and focus on finding customers for a future iteration of Intel’s chipmaking technology.

But early this month, Mr. Tan came under fire from Mr. Trump because the executive had invested in Chinese semiconductor companies. In addition, Cadence Design Systems, which Mr. Tan led for 12 years, pleaded guilty recently to illegally selling its technology to a university with ties to the Chinese military.

In a post on social media, Mr. Trump called Mr. Tan “highly CONFLICTED” and urged him to resign.

Last week, Mr. Tan met with Mr. Trump and cabinet officials at the White House. There, the administration broached the idea of the U.S. government’s taking an equity stake in Intel, these people said.

Mr. Trump called the meeting “interesting” in a subsequent social media post and said Mr. Tan would meet with cabinet officials for further discussions. The president also said the Intel chief’s “success and rise is an amazing story.”

Related Content