What might Trumpian meddling mean for Intel?
Intel, whose shares have jumped by 10% in response to the news of a potential bail-out, is in a funk. Demand for its old chips is waning. Mr Tan, who took over in March, has indicated that the company will not invest further in its advanced '14a' manufacturing process until it finds customers willing to pay it to make chips for them using the technology. Construction of its manufacturing plant in Ohio, where building began to star-spangled fanfare in 2022, has slowed to a crawl. Layoffs have been brutal. The firm has lost around half of its value since 2023 and its huge debt burden has been downgraded by rating agencies.
Like his predecessor, Mr Trump thinks that Intel, America's only domestic manufacturer of advanced chips, is too important to fail. Joe Biden's administration approached the problem by showering the firm with subsidies: the company is the biggest beneficiary of the CHIPS Act. Mr Trump has vowed to cut back on such largesse. But any deal would do the opposite of untethering Intel from the state. Indeed, the president is reportedly even considering using funds from the CHIPS Act to finance an investment.
That the government should meddle in business is now a matter of consensus among American politicians, though they disagree over what form this should take. Mr Trump's approach is becoming clear. He is not bureaucratic enough to be European, and he changes his mind too often to be Chinese. Instead, he behaves more like an activist investor straight off Wall Street, wringing out concessions after dressing down bosses in public. He cares a lot about share prices. Two recent investments indicate how this might work out for Intel.
In June America's government took a 'golden share' in US Steel after the firm was bought by Nippon, a Japanese industrial outfit. Mr Biden had opposed the acquisition in the hope of winning union votes. He blocked the deal on spurious national-security grounds after a review by the Committee on Foreign Investment in the United States (CFIUS), America's inbound-investment watchdog. Mr Trump initiated another review and approved the deal. As part of a revised agreement the president gained the right to appoint a board member and a veto over lowering steel production in America. Intel, too, should expect that any deal will involve interacting directly with Mr Trump, rather than the federal bureaucracy. Control over manufacturing in Ohio may be one area of interest for the president.
What Intel needs more than new board members is customers for its manufacturing, or 'foundry', arm. They have not been forthcoming, partly because Intel's chip-design business competes with would-be buyers such as AMD and Nvidia. A second transaction offers some clues as to how they might be persuaded. In July America's Defence Department invested $400m in MP Materials, a producer of rare-earth metals, and will guarantee the price it receives for its output at above-market rates. A few days later Apple, involved in its own negotiations with the president, also announced a supply agreement with MP Materials. Mr Trump may demand that chip designers such as AMD and Nvidia, which rely on his approval to sell their products in China, use Intel's manufacturing. A more radical option could see him force them to club together and purchase Intel's struggling foundry business. That's a deal any activist would be proud of pulling off.
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