President Donald Trump said on Friday the US would take a 10% stake in Intel under a deal with the struggling chipmaker that converts government grants into an equity share — the latest extraordinary intervention by the White House in corporate America.
The deal puts Trump on better terms with Intel Chief Executive Officer Lip-Bu Tan, after the president recently said the CEO should step down due to conflicts of interest. It will ensure that the chipmaker will receive about $10 billion in funds for building or expanding factories in the US.
Under the agreement, the US will purchase a 9.9% stake in Intel for $8.9 billion, or $20.47 per share, which represents a discount of about $4 from Intel's closing share price of $24.80 on Friday.
The purchase of 433.3 million Intel shares will be made with funding from the $5.7 billion in unpaid grants from the Biden-era CHIPS Act and $3.2 billion awarded to Intel for the Secure Enclave programme, also awarded under Trump's predecessor, Democratic President Joe Biden. Intel's stock rose roughly 1% in the extended session on Friday after closing up 5.5% during regular trading.
Trump met with Tan on Friday, a White House official said. That followed Trump's August 11 meeting with the Intel CEO after the president demanded that Tan resign over his ties to Chinese firms.
"He walked in wanting to keep his job and he ended up giving us $10 billion for the United States. So we picked up $10 billion," Trump said on Friday. Commerce Secretary Howard Lutnick said on X that Tan had struck a deal "that's fair to Intel and fair to the American People."
Playing catch up
The Intel investment marks the latest unusual deal with US companies, including a US government agreement allowing AI chip giant Nvidia to sell its H20 chips to China in exchange for receiving 15% of those sales.
Other recent deals include an agreement for the Pentagon to become the largest shareholder in a small mining company, MP Materials, to boost output of rare earth magnets and the US government winning a "golden share" with certain veto rights as part of a deal to allow Japan's Nippon Steel to buy US Steel.
The federal government's broad intervention in corporate matters has worried critics, who say Trump's actions create new categories of corporate risk. Ahead of the US deal with Intel, Japan's SoftBank agreed to take a $2 billion stake in the chipmaker on Monday.
Intel is getting a $2 billion capital injection from SoftBank Group in a major vote of confidence for the troubled US chipmaker in the middle of a turnaround.
The equity investment, announced by the companies, is a lifeline for the once-iconic US firm, which has struggled to compete after years of management blunders that left it with virtually no foothold in the booming artificial intelligence chip industry.
It will make SoftBank a top-10 shareholder of Intel and add to the Japanese tech investor's ambitious bet on semiconductor and AI assets that includes the $500 billion Stargate US datacentre project.
SoftBank also held talks with Intel on buying its contract chipmaking business ahead of the investment announcement, the Financial Times reported on Tuesday, citing multiple people with knowledge of the talks.
Some industry observers still question Intel's ability to surmount its problems. Daniel Morgan, Senior Portfolio Manager at Synovus Trust, said Intel's problems are beyond a cash infusion from SoftBank or equity interest from the government, singalling out Intel's contract chip manufacturing business, known as its foundry unit.
"Without government support or another financially stronger partner, it will be difficult for the Intel foundry unit to raise enough capital to continue to build out more Fabs at a reasonable rate," he said. Intel "needs to catch up with TSMC from a technological perspective to attract business," he added.
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