US Secretary of Commerce Howard Lutnick announced on Friday that Washington will take a 10% ownership share 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 added a photo of himself with Intel CEO Lip-Bu Tan.
President Donald Trump unveiled the deal earlier in the Oval Office. He described it as “a great deal for them.”
Shares of the Santa Clara-based chipmaker jumped more than 5% on Friday.
Intel confirmed that the US government will inject $8.9bn (£6.6bn) into its common stock.
Funding shift supports investment
Intel said the money will come from grants already approved but not yet distributed. That includes funds promised under the CHIPS and Science Act, passed during President Joe Biden’s administration.
“As the only semiconductor company that conducts leading-edge R&D and manufacturing in the US, Intel remains committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s focus on boosting domestic chipmaking. He said it drives “historic investments in an industry crucial to national security.”
The CHIPS Act was designed to restore semiconductor manufacturing to the United States.
Intel struggles against Nvidia
Intel has faced challenges expanding its chip capacity in recent years. It has fallen behind Nvidia, whose market value has soared beyond $4tn while Intel’s hovers near $100bn.
Once a Silicon Valley titan, Intel missed the mobile revolution. It also failed to lead in artificial intelligence, where Nvidia dominates.
Trump pressures Intel leadership
Trump has recently demanded Tan’s resignation. He accused the Intel chief of questionable ties to China.
The president labelled Tan “highly conflicted” over alleged investments in firms linked to the Chinese military.
Tan dismissed the accusations as “misinformation” in a note to staff. He insisted he had always followed legal and ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. American law allows citizens to invest in Chinese companies.
Trump’s attack came after Republican Senator Tom Cotton sent a letter to Intel’s board. Cotton questioned whether the firm could safeguard taxpayer funds and comply with security regulations.
Following the criticism, Tan visited Trump at the White House.
White House calls deal innovative
Press Secretary Karoline Leavitt described the plan as “a creative idea that’s never been done before.”
Reports said the Trump administration also ordered Nvidia and AMD to hand over 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, said the government stake resembled previous grant funding.
“It serves the same objective,” Feldgoise explained. “It signals stronger government involvement in markets to advance economic and security goals. The aim is regaining leadership in semiconductor production.”
The move is rare in modern times but not without precedent.
Historical parallels
During the 2008 financial crisis, Washington took a majority stake in General Motors as the company neared bankruptcy. The government later withdrew, recording a $10bn loss.
Feldgoise noted that Trump’s administration pursued a similar path earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That agreement drew scrutiny from watchdog groups after revelations that the Department of Defense relied on a Cold War-era law to bypass procurement rules.
