US government takes 10% stake in Intel in unusual bid to revive chipmaking

[Daniel Sims]

The big picture: Intel's efforts to climb out of its ongoing crisis with help from the US government could pave the way for unprecedented state intervention in the technology and manufacturing industries. The Trump administration is considering redirecting billions in CHIPS Act funds to reduce the country's reliance on imports.

President Trump and Intel announced an agreement on Friday that will give the US government a 10 percent stake in the company. The passive ownership will not include boardroom representation, but similar deals between the state and other tech companies could be on the horizon.

Trump indicated that the government would pay nothing for the shares, which are primarily financed by funds the Biden administration promised to Intel last year as part of the CHIPS and Science Act. The investments, totaling $11.1 billion, will be converted into equity. Following the announcement, Intel's stock rose 6.6 percent on Friday.

The move is unusual, as the US government typically takes partial ownership in private companies only under extreme circumstances, such as war or economic crisis. For example, it directly supported several banks and automakers during the 2008 financial crisis by purchasing stakes.

Propping up Intel, however, is about securing domestic semiconductor production. Intel is the only American company attempting to manufacture semiconductors at the most advanced process nodes, but Trump acknowledged that it has recently fallen behind rivals Samsung and TSMC.

As TSMC's 3nm nodes reach maturity, Intel is struggling to break into the 2nm and sub-2nm frontier. The company recently canceled its 20A (2nm-class) node, and the future of its 18A and 14A processes is uncertain, as the former is currently plagued by low yields.

Intel may not be the last company to strike an equity deal with the US government, but it remains unclear which firms might follow.

While TSMC and Micron may seem like obvious candidates, officials said the government is not pursuing stakes in those companies because they have already committed to expanding US investments. Although TSMC has kept its most advanced fabrication plants in Taiwan, it is growing its US-based manufacturing capacity for established nodes.

Sources recently told Reuters that Trump is also considering directing another $2 billion in CHIPS Act funds toward domestic rare earth minerals, which are critical for semiconductor manufacturing. China controls much of the global rare earth market, and strengthening US production with CHIPS Act funds could help reduce dependence on Chinese imports without requiring new spending allocations from Congress.

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US government takes 10% stake in Intel in unusual bid to revive chipmaking

 

[Theinsanegamer]

I mean, it kept the big 2.5 alive, but I dont see this working. Intel doesnt need a cash injection, it needs to cut out and replace its management with a leaner, hungrier, driven team. Intel now is directionless and cant see anything through, more money only prolongs the collapse.

 

[Megalomaniac]

Where is Intel made?

 

[WaphleStomp]

Seems like a bad investment. Not because Intel isn't a big, powerful company, but Intel chips aren't made in the US. So, is Intel going to build chips at home now? with US labour prices being how many X more than offshore? so instead of a CPU being, eg. $400, now it's going to be $1,200? and this is after intel spends $15Billion to build a manufacturing plant in the US and spends, what? ... 5 years tweaking it before it's ready?
Meanwhile, AMD is now the big kid on the block, the train is running at full speed, their procs are better, faster, more powerful than Intel's.
What does it mean right now? probably a slight bump in Intel stock prices, but when the realities of Intel's manufacturing scene sink in the stock is going to drop significantly, couple that with AI's impending bubble bursting, 'cause 99% of AI sucks, the market's going to steeply nosedive and correct, and Trump'll iddiotically waste breath blaming Biden for the soon-to-be stock-market woes.
If trump had any investing brains he would have used that $11B to short Intel and AI companies.

 

[Y2JB47]

Sounds a bit socialist.

This administration does not stand for anything beyond racism and self enrichment. They are morally and intellectually bankrupt.

 

[Puiu]

Sounds a bit socialist.

This administration does not stand for anything beyond racism and self enrichment. They are morally and intellectually bankrupt.

Watch the people yelling "COMUNISM" for any government intervention/involvement or regulations make an U turn on this.

 

[umeng2002]

Enforcing laws and protecting American companies is not racist. Doing this isn't just to keep Intel afloat per se. I'm sure Intel has lots of military contracts and frankly, intelligence agency ties that need protecting because they still are one if the best chip designers in the world.

This would be preferred to some random foreigner buying up Intel stock, and exposing all sorts of national security risks.

That said, the same people who complain about student loan forgiveness or single payer healthcare also turn a blind eye to government bailouts of large corporations. Odd how that works.

 

[ScottSoapbox]

We've just given up all pretense of capitalism in the US.

The Cronyism where big business and government work together to help each other at taxpayer expense is now transitioning to it's next phase as the system stumbles towards its inevitable collapse.

 

[Dr Roboto]

I am not a fan of this, but it is easiest to swallow if you look at it like the Auto bailouts in 2008–2010. The US government stepped in to "save" these companies.

It looks like the Trump admin is looking to do the same with Intel. However, as with everything Trump touches, there are always strings attached and he will weaponize it some how. To be continued ...

 

[GodisanAtheist]

"Picking winners and losers" and "Too big to fail" are back baby!

And it was all done without congress or any sort of actual law (remember those?) limiting the scope and any conflicts of interest. Art of the deal.

Outside of that, as comments have mentioned above, Intel's problem isn't *money* it's that they have a company culture of iteration rather than innovation and we're too happy to skate by on Skylake+++++++ on 14nm++++++++ for too long so when Qualcom and AMD and Nvidia etc changed the game on them they were unable to adapt.

 

[Coisa]

Conservationism is not beyond socialism while practicing fascism. Like it, because you have to, for another 41 months. Voting Dem in 15 months can help put some brakes on these travesties.

 

[LemmingO]

Gotta say that bailing out major companies like the US government did in 2009 was completely useless. 10% of a sinking ship might just be a better deal than billions thrown at banks just for them to pay themselves fat bonuses.

 

[Haaky]

No TACO isn't taking 10% of Intel for the good of Intel or the people.
TACO is taking 10% of Intel as a F****** Bribe, plane and simple.

 

[Axeia]

Knew something like this would happen. Boeing and Intel are too important to have as a country to let them go bankrupt.
So a stake in Intel and the presidents direct involvement in making deals with other countries to buy planes it is (not to mention the rather lucrative F-47 contract).
I get it, there's only 2 big companies that provide pretty much all of the worlds commercials jets (Boeing and Airbus) and that gives enormous political power if you can threaten to withhold that. Similarly with Intel there's only 2 x86 companies (although both are American), only 3 top-end semi-conductor manufacturers (Intel, Samsung and TSMC) not to mention that Intel does a lot of things that can carry a lot of sway and/or are important to be able to produce independently of others.
But! Both Boeing and Intel aren't exactly victims of certain market conditions... both just played the stockmarket game too hard. Boeing prioritizes creating shareholder value (at the cost of everything) way too high which led to under investing in quality control and developing new systems.
Intel got far too comfortable relying on process node advances investing near nothing in advancing their architecture and once that started failing things went downhill hard.
It's hard to justify that the state should intervene and keep these companies from meeting their demise without requiring them to make significant changes.

e.g. Boeing shouldn't be self regulated. The FAA shouldn't deputize inspectors and let people on Boeings payroll pass inspections. A conflict of interest that's so clear to see a blind man could do so.
Don't throw money at the problem hoping it gets fixed - actually fix the darn problem.

Intel shouldn't get bailed out and continue on its path of slowly dismantling itself for share holder value salvaging... that money should go straight into R&D. Their architecture seems decent enough now to iterate upon but what really needs is fixing is the production side. Either foreign talent needs to be moved to Intel or Intel needs to have some kind of means to improve.

Trump indicated that the government would pay nothing for the shares, which are primarily financed by funds the Biden administration promised to Intel last year as part of the CHIPS and Science Act

Biden administration: Here have money on condition you build over here.
Trump administration: Hey that money was promised to you by my predecessor - yeah, you're getting that in exchange for 10% of your company instead now.
What good is the word of the state if it changes when the administration changes? What if th next administration decides it should be 20% instead? Clearly the word and contracts signed by the state/administration/president mean nothing after 4 years.

 

[seeprime]

Where is Intel made?

A quick search brought this up. )Try the web for quick answers.)

Chandler, Arizona
Rio Rancho, New Mexico
Hillsboro, Oregon

Leixlip, Ireland
Jerusalem, Israel
Kiryat Gat, Israel

Shanghai, China
Chengdu, China
San Jose, Costa Rica
Kulim, Malaysia
Penang, Malaysia
Ho Chi Minh City, Vietnam

This does not include new planned fabs.

 

[ScottSoapbox]

Conservationism is not beyond socialism while practicing fascism. Like it, because you have to, for another 41 months. Voting Dem in 15 months can help put some brakes on these travesties.

A good chunk did that exact same thing (in reverse) put some brakes on the travesties of the Dems last year.

The problem is that both parties are corrupt and the candidates are selected before any voting happens. It doesn't matter what people vote as long as there are only two bad choices.

We need viable third party candidates to say F U to both parties. Of course both parties keep changing election rules any time a third party starts to gain traction to maintain the status quo.

Failing that, at the very least we need open primaries to have a slightly better chance of getting slightly better candidates.

 

[ioliveirafarias]

The invisble hand of the market took money from contributors whitout been seen.

 

[KnightSayNI]

A good chunk did that exact same thing (in reverse) put some brakes on the travesties of the Dems last year.

The problem is that both parties are corrupt and the candidates are selected before any voting happens. It doesn't matter what people vote as long as there are only two bad choices.

We need viable third party candidates to say F U to both parties. Of course both parties keep changing election rules any time a third party starts to gain traction to maintain the status quo.

Failing that, at the very least we need open primaries to have a slightly better chance of getting slightly better candidates.

Lololololololololol. 3rd party. You must not be from around here.

 

[Haaky]

I am not a fan of this, but it is easiest to swallow if you look at it like the Auto bailouts in 2008–2010. The US government stepped in to "save" these companies.

It looks like the Trump admin is looking to do the same with Intel. However, as with everything Trump touches, there are always strings attached and he will weaponize it some how. To be continued ...

Everything TACO touches goes to ****. Look at every bankrupt company he has ever started. As soon as Delbert DumbButt gets involved it dies.
TACO better stay away from AMD

 

[Trapped Nowhere]

President calls him highly conflicted 2 weeks ago and now highly respected. Who's playing who

 

[loki1944]

Sounds a bit socialist.

This administration does not stand for anything beyond racism and self enrichment. They are morally and intellectually bankrupt.

More nationalist than socialist.

 

[ScottSoapbox]

Lololololololololol. 3rd party. You must not be from around here.

Oh I'm from around here. The two party system is broken and will never be fixed by voting for either of them. The sooner people realize that the sooner we can try something that might actually work. I much prefer to root for the slim possibility of an true solution than to blind hope that this time it will be different if I trust in the promises of yet another R or D politician.

 

[ScottSoapbox]

More nationalist than socialist.

Not really. The CHIPS act was nationalist while this is closer to socialism though still fundamentally different from both.

Government owned business is the foundation of socialism but in this case it's only 10% so it's closer to a sovereign wealth fund.

A quick google of countries with SWFs shows not the greatest company: China, United Arab, Saudi Arabia, Kuwait, Qatar, Norway, and Singapore.

 

[bclaymiles]

Seems like a bad investment. Not because Intel isn't a big, powerful company, but Intel chips aren't made in the US. So, is Intel going to build chips at home now? with US labour prices being how many X more than offshore? so instead of a CPU being, eg. $400, now it's going to be $1,200? and this is after intel spends $15Billion to build a manufacturing plant in the US and spends, what? ... 5 years tweaking it before it's ready?
Meanwhile, AMD is now the big kid on the block, the train is running at full speed, their procs are better, faster, more powerful than Intel's.
What does it mean right now? probably a slight bump in Intel stock prices, but when the realities of Intel's manufacturing scene sink in the stock is going to drop significantly, couple that with AI's impending bubble bursting, 'cause 99% of AI sucks, the market's going to steeply nosedive and correct, and Trump'll iddiotically waste breath blaming Biden for the soon-to-be stock-market woes.
If trump had any investing brains he would have used that $11B to short Intel and AI companies.

Fab 42 in Arizona has been producing 10nm chips since 2020, Fab 52 - also in Arizona - has produced production samples at 18A this year and is expected to begin full run late this year/early next year.

AMD is fabless. There's no reason for the govt to invest in them, it won't help bring any manufacturing to our shores.

 

[Angga B]

Investing money into corporation and receive % share in return, is NORMAL.
The other way around, by the previous administration was NOT. There's no spinning of words , including making it sounds extraordinary, can alter that logic.