US pursuing stake in struggling chipmaker Intel, commerce secretary says
The Trump administration wants to convert funding from the Chips and Science Act, which funds research and manufacturing of semiconductor chips in the US, into equity in the struggling tech company, according to Howard Lutnick.
Intel was once a leader in producing computer processors, but is now seen as a laggard behind the likes of Nvidia, which last month became the first public company in history to scale a $4tn valuation after a stratospheric stock market rise.
Lutnick criticized the structure of the Chips Act, signed into law in 2022 under Joe Biden.
'Why are we giving a company worth $100bn this kind of money? What is in it for the American taxpayer? And the answer Donald Trump has is we should get an equity stake for our money,' he told the CNBC financial news network. 'So we'll deliver the money which was already committed under the Biden administration, we'll get equity in return for it.'
Shares in Intel rallied 7.5% in New York.
The conversion of the funding would not confer governing rights typical of a company's largest shareholder to the federal government, according to Lutnick. 'It's not governance, we're just converting what was a grant under Biden into equity. Non-voting,' he said.
Lutnick did say the goal of the equity stake would be much the same as that of the Chips Act, bluntly stating: 'We need to make our own chips here. We cannot rely on Taiwan.'
A large portion of the world's semiconductors originate from Taiwan Semiconductor Manufacturing Company (TSMC), based in the city of Hsinchu. TSMC has also received Chips Act funding to build semiconductor manufacturing facilities in the US, with construction beginning in Arizona.
The US treasury secretary, Scott Bessent, also said on Tuesday that a potential stake would not oblige US businesses to purchase Intel chips.
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'The last thing we're going to do is take a stake and then try to drum up business,' he told CNBC. 'The stake would be a conversion of the grants and maybe increase the investment into Intel to help stabilize the company for chip production here in the US. There's no talk of trying to force companies to buy from Intel.'
The prospect of large US investment in Intel has reinvigorated investor interest in the company, whose stock value has declined by half over the past five years. Shares jumped last week after initial reports of discussions with the US government, and the Japanese conglomerate Softbank announced late on Monday that it would take a $2bn stake in the company.
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