The United States government has acquired a 10 percent ownership stake in the homegrown but embattled chipmaker Intel Corporation. Commerce Secretary Howard Lutnick explained in a public statement made on 22 August 2025 that the acquisition worth USD 8.9 billion reflects a broader policy shift under the second Trump administration that centers on attaching industrial subsidies directly to equity stakes in strategically important companies.
Intel and U.S. Government Forge New Partnership Through Equity Acquisition: Federal Grants Worth USD 8.9 Billion Used to Buy Intel Shares
What are the Key Details of the Stake Acquisition?
Intel confirmed the purchase involved 433.3 million common shares at USD 20.47 each. This was a discounted share price compared to the current market valuation. The favorable transaction translated to an immediate increase in the value of the purchased shares. Donald Trump said on a Truth Social post that the U.S. government now owns Intel shares worth approximately USD 11 billion. He called this a significant win for America.
Funding for the acquisition of ownership stake was drawn from already awarded government programs. Specifically, of the total amount, USD 5.7 billion originated from pending CHIPS Act grants, while USD 3.2 billion came from secure chip development programs. Officials of the Trump administration argued this conversion ensured taxpayer funds generated long-term value rather than non-recoverable subsidies.
It is also worth underscoring that the U.S. government will not receive board representation or governance rights despite the sizeable stake it now owns. Intel highlighted this in a statement. However, the agreement includes a warrant permitting the government to acquire an additional 5 percent stake if the company ceases to be the majority owner of its foundry business, thus reflecting national security considerations.
Trump personally hailed the agreement, saying the United States “paid nothing” for the shares, referencing the repurposing of previously committed CHIPS Act funds. He described the arrangement as mutually beneficial, highlighting that the homegrown chipmaker has gained stability and additional financial boosts while the federal government succeeded in securing a significant strategic and financial position.
Intel Chief Executive Officer Lip-Bu Tan expressed confidence in the deal. In a statement, he stressed that Intel remains the only homegrown American semiconductor company conducting leading-edge logic research and manufacturing domestically. The executive underscored the commitment of the company to ensuring the most advanced semiconductor technologies continue to be produced on American soil.
Why Did the U.S. Government Buy Intel Shares?
Intel is the only American company still capable of producing the most advanced logic chips domestically. United States officials consider the semiconductor industry with manufacturing capabilities critical for national defense, artificial intelligence progress, and other technological leadership. Owning a stake in Intel signals a commitment to safeguard and expand this capability while protecting national interests.
The transaction has also been framed as a better use of public funds and better implementation of government subsidies. Commerce Secretary Lutnick explained that if the government is going to give billions of dollars to American companies under the CHIPS Act funding, it should receive equity in return, instead of providing subsidies without ownership. This guarantees taxpayers share in any upside if Intel recovers.
Remember that the funds did not come from new spending. The USD 8.9 billion amount was drawn from already awarded CHIPS Act grants and other government programs. The government essentially converted subsidy commitments into equity. This means that it took ownership shares instead of handing Intel free grants. The transaction was also at a discount to further maximize the benefits to the U.S. government.
Why Did Intel Sell Shares to the U.S. Government?
The deal comes as Intel struggles to catch up with Taiwan Semiconductor Manufacturing Company or TSMC. The Taiwanese chipmaker produces and supplies semiconductors for top tech companies Apple, Nvidia, Qualcomm, and AMD. Note that Intel has faced repeated delays in introducing new semiconductor technologies on top of escalating costs. These put it at a disadvantage in the highly competitive semiconductor industry.
It has invested heavily in its Ohio factory complex, previously labeled the Silicon Heartland. The multibillion-dollar site is designed to produce advanced artificial intelligence chips. However, construction has been slowed, with operations now scheduled to begin in 2030 due to changing market conditions. Tan also circulated a memo warning of “no more blank checks” for undertakings, signaling tighter cost controls.
Taking an equity investment, even at a discounted rate, gave Intel a primary infusion of funds without more debt. Moreover, by allowing the U.S. government to take a stake, the company has strong political and financial backing. The expansion plans of the company are deeply tied to federal subsidies and national security concerns. Refusing the offers also means losing access to billions in already approved grants.
FURTHER READINGS AND REFERENCES
- Intel Corporation. 22 August 2025. “Intel and Trump Administration Reach Historic Agreement to Accelerate American Technology and Manufacturing Leadership.” Intel Corporation. Available online
- Ruwitch, J. 22 August 2025. “Intel Will Give the U.S. Government a 10% Stake, Trump Says.” NPR. Available online
Photo Credit: Coolceasar / Intel Headquarters at 2200 Mission College Boulevard in Santa Clara, California / 2023 / Adapted / CC BY-SA 4.0