U.S. Government Demands Equity Stake in Intel for CHIPS Act Funds, Potentially Making It the Largest Shareholder
The U.S. government is seeking an equity stake in Intel as a condition for funding under the CHIPS Act, according to Commerce Secretary Howard Lutnick. Speaking on CNBC’s “Squawk on the Street,” Lutnick stated that the government should receive equities in return for the funds already committed by the Biden administration.
Shares of Intel rose 7% on Tuesday, building on gains following reports of potential involvement from the Trump administration. According to Bloomberg, discussions are underway regarding a 10% stake in Intel, which would make the U.S. government the chipmaker’s largest shareholder.
In a separate development, SoftBank announced a $2 billion investment in Intel on Monday, securing a 2% ownership stake. This move places SoftBank among the company’s top five shareholders, as per FactSet data.
Lutnick clarified that this arrangement would not grant the government any voting or governance rights within Intel. He described it as converting a grant into equity for the U.S. government under the Trump administration.
Intel declined to comment on the matter. Lutnick also suggested that President Donald Trump may pursue similar deals with other CHIPS Act recipients.
Last fall, Intel announced a nearly $8 billion grant from the legislation to construct its factories. Taiwan Semiconductor Manufacturing Co. received $6.6 billion under the same law to bolster chip fabrication at its Arizona facilities.
Trump has advocated for reshoring U.S. manufacturing to reduce dependence on companies like Samsung and TSMC for chip production. Intel is currently investing heavily near Columbus, Ohio, to establish a series of advanced chip factories, which the company previously dubbed the “Silicon Heartland.”
However, in July, Intel CEO Lip-Bu Tan informed employees that construction of its Ohio factory complex would be slowed down, depending on market conditions. The first factory is now scheduled to commence operations in 2030.
The Ohio factory is one of the most high-profile projects funded by the CHIPS and Science Act, which became law in 2022. The legislation committed the U.S. government to fund chip development and research, with an estimated cost of around $53 billion.
Lutnick criticized the Biden administration for providing free funds to Intel and other companies like TSMC without expecting any equity in return. He noted that under Trump’s leadership, this approach could change, with the U.S. government seeking equity in exchange for its financial support.
Intel has faced challenges capitalizing on the artificial intelligence boom in advanced semiconductors and has invested heavily to establish a manufacturing business without securing significant customers. Tan took over as CEO from Pat Gelsinger, who was ousted in December, after meeting with Trump at the White House last week following the president’s call for his resignation, allegedly due to ties with China.