U.S. Government Seeks 10% Stake in Intel Amidst Major Policy Shift
U.S. Government Eyes 10% Stake in Intel Amid Dramatic Shift in Relations
SAN FRANCISCO (AP) — In a surprising turn of events, U.S. Commerce Secretary Howard Lutnick announced on Tuesday that the Trump administration is negotiating to acquire a 10% stake in Silicon Valley giant Intel. This move marks a significant pivot from the president’s earlier demands for Intel’s CEO to resign, highlighting a complex relationship between the government and the tech industry.
During a televised interview with CNBC, Lutnick confirmed that the investment would involve converting federal grants previously allocated under President Joe Biden into Intel stock. “We think America should get the benefit of the bargain,” Lutnick stated, emphasizing the administration’s belief that this investment is a strategic move for the nation.
Intel, once a powerhouse in the semiconductor industry, has faced challenges in recent years, particularly after missing the mobile computing wave initiated by the iPhone in 2007. The company has struggled to keep pace with competitors like Nvidia and Advanced Micro Devices, which have thrived during the current artificial intelligence boom.
The proposed investment comes on the heels of a $2 billion stake that Japanese tech giant SoftBank Group announced it would take in Intel, purchasing shares at a slight discount. Following this news, Intel’s stock surged nearly 7%, closing at $25.31, reflecting renewed investor confidence.
SoftBank’s chairman, Masayoshi Son, emphasized the importance of semiconductors, stating, “This strategic investment reflects our belief that advanced semiconductor manufacturing and supply will further expand in the United States, with Intel playing a critical role.” This sentiment aligns with Trump’s goal of boosting domestic chip production, a key focus of his administration’s trade policies.
Despite the potential benefits, the U.S. government’s foray into Intel ownership carries risks. The company is currently undergoing a turnaround under CEO Lip-Bu Tan, who has initiated significant cost-cutting measures and delayed construction on a new chip plant in Ohio. Intel’s market value remains around $110 billion, significantly lower than its peak during the internet boom.
Interestingly, Trump had previously called for Tan’s resignation due to concerns over his investments in Chinese chipmakers. However, after Tan publicly reaffirmed his commitment to the U.S., the president appeared to soften his stance, paving the way for the current negotiations.
While it is rare for the U.S. government to become a major shareholder in a private company, it is not without precedent. The government took a significant stake in General Motors during the 2008 financial crisis, ultimately resulting in a loss of approximately $10 billion when the stock was sold.
As the negotiations progress, the implications of this potential investment could reshape the landscape of the semiconductor industry and redefine the relationship between the government and major tech players.
