US Secretary of Commerce Howard Lutnick announced on Friday that Washington will take a 10% stake in Intel.
“This historic agreement strengthens American leadership in semiconductors. It will grow our economy and secure our technological edge,” Lutnick wrote on X. He shared the message with a photo of himself alongside Intel CEO Lip-Bu Tan.
President Donald Trump revealed the deal earlier in the Oval Office. He called it “a great deal for them.”
Shares of the Santa Clara-based chipmaker rose more than 5% on Friday.
Intel confirmed that the US government will invest $8.9bn (£6.6bn) in Intel common stock.
Funding redirected from earlier grants
Intel said the funds will come from grants awarded but not yet disbursed. That includes money promised under the CHIPS and Science Act, passed during President Joe Biden’s administration.
“As the only semiconductor company that carries out leading-edge R&D and manufacturing in the US, Intel stays committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s policy on domestic chipmaking. He called it a driver of “historic investments in a vital industry tied to security.”
The CHIPS Act aims to restore semiconductor production inside the United States.
Intel falls behind competitors
Intel has struggled to expand its chip capacity in recent years. It trails Nvidia, whose market cap has soared past $4tn while Intel’s remains near $100bn.
Once a Silicon Valley icon, Intel failed to seize opportunities in mobile computing. It also fell behind in artificial intelligence, where Nvidia dominates.
Trump’s clash with Intel’s leader
Trump targeted Intel and demanded Tan’s resignation earlier this month. He accused the CEO of troubling links to China.
The president called Tan “highly conflicted” over alleged investments in firms tied to the Chinese military.
Tan dismissed the claims as “misinformation” in a note to staff. He insisted he had always acted within legal and ethical boundaries.
Tan, a US citizen, was born in Malaysia and grew up in Singapore. American law allows investment in Chinese firms.
Trump’s criticism followed a letter by Republican Senator Tom Cotton to Intel’s board. Cotton questioned Intel’s ability to handle taxpayer funds responsibly and comply with security rules.
After the attacks, Tan met Trump at the White House.
White House praises bold step
Press Secretary Karoline Leavitt described the proposal earlier this week as “a creative idea that’s never been done before.”
Reports said the Trump administration also ordered Nvidia and AMD to give Washington 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, compared the stake to earlier grant funding.
“It serves the same goal,” Feldgoise said. “It shows a more direct role in markets to advance economic and security interests. The focus is on regaining technological leadership in chip manufacturing.”
The deal is unusual today but has past examples.
Government stakes in history
During the 2008 financial crisis, Washington took a majority share in General Motors as it neared bankruptcy. The government later sold its stake, taking a $10bn loss.
Feldgoise noted that Trump’s administration followed a similar path earlier this year with MP Materials. The Nevada-based firm mines rare earth metals.
That agreement faced criticism from watchdog groups after it emerged the Department of Defense relied on a Cold War-era law to bypass procurement rules.
