The US authorities is taking an $8.9 billion stake in Intel

President Donald Trump says the US authorities is taking a ten % stake in chip maker Intel. Trump shared the information throughout a press conference on Friday, although an official announcement remains to be forthcoming, Reuters reports. Information of a plan to transform Intel’s beforehand promised CHIPS Act funding into fairness within the firm was first reported earlier in August.

A meeting between Intel CEO Lip-Bu Tan and Trump following the President’s call for Tan to resign appears to be the supply of the deal. “He walked in wanting to maintain his job and he ended up giving us 10 billion {dollars} for the USA. So we picked up 10 billion,” Trump shared through the press convention.

Intel later introduced extra particulars on the funding. The corporate mentioned in a press release that the federal government will “make an $8.9 billion funding in Intel frequent inventory.” It provides that the fairness stake can be funded by $5.7 billion beforehand earmarked for Intel as a part of the CHIPS act, and $3.2 billion awarded as a part of the Safe Enclave program. Intel had beforehand recieved $2.2 billion in CHIPS grants, bringing the federal government’s complete spend on the chipmaker to $11.1 billion. The federal government paid $20.47 per share, so the $8.9 billion funding is equal to a 9.9 % stake within the firm.

It is essential to notice that the federal government investing in Intel just isn’t the identical factor as receiving free cash, it is the precise reverse. Regardless of earlier comments from US Commerce Secretary Howard Lutnick suggesting the stake could be non-voting, frequent inventory does include voting rights. Intel does observe that the funding can be passive, with no board illustration, and that the federal government has agreed to vote with its board of administrators “on issues requiring shareholder approval, with restricted exceptions.”

Intel was alleged to obtain up to $10.86 billion in federal funding to develop its chip manufacturing enterprise within the US as a part of the CHIPS Act. By agreeing to this deal, Tan is probably going making an attempt to ensure that funding nonetheless goes by way of, one in every of a number of drastic strikes to maintain Intel afloat. Tan assumed the title of CEO following Pat Gelsinger’s sudden retirement in 2024. Since taking on, he is already dedicated to cutting Intel’s workforce by 20 %. Even with decrease prices and assured funding, the corporate’s future remains to be unsure: Intel is reportedly struggling to make its next-gen Panther Lake chips at scale.

The Trump administration says it won’t seek similar equity deals with different recipients of CHIPS act funding. That hasn’t stopped them from making different equally unprecedented monetary preparations. NVIDIA and AMD reportedly struck a cope with the US authorities that provides the businesses the power to export merchandise to China in trade for 15 % of their earnings.

Replace, August 22, 6:20PM ET: This story was up to date after publish with extra data on the deal from Intel, and the headline was modified to the greenback determine, slightly than the beforehand acknowledged “10 %” quantity. A bit quoting US Commerce Secretary Howard Lutnick saying that the stake was non-voting was additionally ammended to mirror the ultimate particulars of the deal.