TLDR
- U.S. government purchased $8.9 billion worth of Intel stock, acquiring 433.3 million shares at $20.47 each for a 10% stake
- Deal combines $5.7 billion in CHIPS Act grants with $3.2 billion from secure chip programs
- Intel shares rose 6% on Friday following the announcement
- Government gets warrant for additional 5% stake if Intel loses majority control of foundry business
- SoftBank separately invested $2 billion in Intel earlier this week
Commerce Secretary Howard Lutnick dropped a bombshell on Friday. The U.S. government now owns 10% of Intel Corporation.
The deal involves $8.9 billion in government investment. Intel sold 433.3 million shares to Uncle Sam at $20.47 per share.
That price represents a discount to current market value. Intel shares jumped 6% during Friday trading on the news.
The government’s funding comes from two sources. $5.7 billion will come from previously awarded CHIPS Act grants that hadn’t been paid out yet.
The remaining $3.2 billion comes from separate government programs. These programs focus on making secure chips for national security purposes.
President Trump celebrated the deal on Truth Social. “The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars,” he wrote.
Trump called it “a great Deal for America and, also, a great Deal for INTEL.” The president met with Intel CEO Lip-Bu Tan on Friday afternoon.
Government Gets More Than Just Stock
The government secured additional rights in the deal. Intel granted a warrant allowing the government to buy another 5% of the company.
This warrant kicks in only if Intel loses majority control of its foundry business. The government won’t get a board seat or other governance rights.
Tan emphasized Intel’s unique position in his statement. “As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” he said.
The deal follows another major investment announcement this week. SoftBank committed $2 billion to Intel, equal to about 2% of the company.
Intel’s market cap sits just over $100 billion. Trump told reporters Friday that he believes the government stake represents “a great deal for them.”
Intel’s Ohio Factory Plans Continue
Intel has been building chip factories in Ohio for years. The company calls this area the “Silicon Heartland.”
These facilities will produce the most advanced chips, including those needed for AI applications. But Intel hit the brakes on construction in July.
Tan told employees there would be “no more blank checks.” The company slowed down Ohio factory construction based on market conditions.
The Ohio facility now won’t start operations until 2030. This represents a delay from earlier timelines.
Intel faces stiff competition from Taiwan Semiconductor Manufacturing Company. TSMC makes chips for Apple, Nvidia, Qualcomm, AMD, and even Intel itself.
The CHIPS Act became law in 2022 under the Biden administration. Intel finalized nearly $8 billion in grants under this program last fall.
Commerce Secretary Lutnick had telegraphed this move earlier in the week. He told CNBC that the government wanted equity in exchange for CHIPS Act money.
“We should get an equity stake for our money,” Lutnick said on “Squawk on the Street.” The government delivered on that promise Friday.
