US Secretary of Commerce Howard Lutnick announced on Friday that Washington will purchase 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 posted the message with a photo alongside Intel CEO Lip-Bu Tan.
President Donald Trump confirmed the deal earlier in the Oval Office. He called it “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 invest $8.9bn (£6.6bn) in its common stock.
Grants redirected to support deal
Intel said the funding will come from grants awarded but not yet paid. That includes money provided 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 is deeply committed,” Tan said. “We will ensure the world’s most advanced technologies are American made.”
Tan praised Trump’s emphasis on domestic chipmaking. He said it fuels “historic investments in an industry essential to economic growth and national security.”
The CHIPS Act aims to bring semiconductor manufacturing back to the United States.
Intel loses momentum in competition
Intel has struggled to expand production capacity in recent years. It trails Nvidia, whose market value has surged beyond $4tn while Intel’s remains close to $100bn.
Once a Silicon Valley giant, Intel missed the mobile boom. It also failed to dominate artificial intelligence, where Nvidia now leads.
Trump pressures Intel CEO
Trump has recently demanded Tan’s resignation. He accused the Intel chief of problematic ties to China.
The president described Tan as “highly conflicted” due to alleged investments in companies connected to the Chinese military.
Tan rejected the allegations as “misinformation” in a message to staff. He said he had always operated within the law and followed ethical standards.
Tan, a US citizen, was born in Malaysia and raised in Singapore. US law allows citizens to invest in Chinese firms.
Trump’s criticism followed a letter from Republican Senator Tom Cotton to Intel’s board. Cotton questioned whether Intel could safeguard taxpayer money and follow security rules.
After the criticism, Tan met Trump at the White House.
White House calls deal groundbreaking
Press Secretary Karoline Leavitt described the stake as “a creative idea that’s never been done before.”
Reports said the Trump administration also required Nvidia and AMD to give Washington 15% of revenue from AI chip sales to China.
Jacob Feldgoise, Senior Data Research Analyst at Georgetown University, said the Intel deal echoed previous grant funding.
“It serves the same purpose,” Feldgoise said. “It shows stronger government involvement in markets to achieve economic and security goals. The aim is regaining technological leadership in semiconductor production.”
The deal is rare in modern times but not without precedent.
Historical examples of state stakes
During the 2008 financial crisis, Washington took a majority stake in General Motors as bankruptcy loomed. The government later exited, recording a $10bn loss.
Feldgoise noted that Trump’s administration took a similar approach earlier this year with MP Materials. The Nevada-based company mines rare earth metals.
That agreement drew criticism from watchdog groups after it was revealed that the Department of Defense relied on a Cold War-era law to bypass procurement rules.
