As Trump Considers 10% Intel Stake, Chipmakers Fear Tilted Playing Field

The Trump administration appears to be in serious discussions about converting up to US$10.9 billion (A$16.4 billion) in CHIPS Act grants into equity in Intel.

That would give Washington a 10% stake and make it the chipmaker’s largest shareholder.

As Channel News has reported, it’s been an eventful period for the troubled American semiconductor manufacturer. One that has been increasingly outcompeted by Taiwan’s TSMC and South Korea’s Samsung in recent times.

Last week, Trump and other Republicans, notably Senator Tom Cotton, expressed serious concerns about Intel CEO Lip-Bu Tan’s links to China.

Trump took to his social media site Truth Social to demand, “The CEO of INTEL is highly CONFLICTED and must resign, immediately.”

The Malaysian-American Tan labelled these allegations as “misinformation”.

Trump and Tan then met in person at the White House. This appears to have softened Trump’s opinion of Tan, who he praised for having “an amazing story”, and sparked talks of the US government offering financial backing to Intel.

What was still speculation last week could become a reality in the coming days. Bloomberg has reported that the US government is now in serious discussions with Intel about taking a 10% stake.

While none of the stakeholders have yet confirmed the deal will go ahead, they haven’t hosed down the speculation either.

White House spokesman Kush Desai stressed that no deal is official until formally announced, while the US Commerce Department and Intel declined to comment.

For Intel, which has racked up $19.6 billion (A$29.4 billion) in foundry losses since 2022 and delayed its much-touted Ohio fab from 2025 to 2030, the cash injection could be a lifeline.

However, Intel’s rivals are understandably nervous. TSMC currently dominates the pure-play foundry market, with a 67.6% market share. Samsung Foundry has about 7.7%. Intel is currently a minor player, with a market share under 2%.

Analysts warn that an ‘America First’ administration taking an equity stake in Intel could result in US tech firms, such as Apple, Nvidia, Qualcomm, Broadcom, redirecting orders away from TSMC and Samsung and to Intel.

For Samsung and TSMC, the prospect of the US government part-owning their American rival signals a new front in the chip war.

For Intel, survival may depend on just how far Washington is willing to go in picking winners.