SAN FRANCISCO (AP) — In a surprising move, President Donald Trump is advocating for the U.S. government to acquire a substantial share in Intel, just weeks after he called for the resignation of the company’s recently appointed CEO, Lip-Bu Tan.
This potential acquisition aligns with the Trump administration’s ongoing strategy to bolster domestic manufacturing and reduce reliance on foreign chip suppliers amid rising global tensions.
Sources indicate that discussions are underway to secure a 10% stake in Intel through the conversion of government grants previously pledged to Intel under President Joe Biden.
Should this deal be finalized, it would position the U.S. government as one of Intel’s largest shareholders, further complicating the boundaries between the private sector and public governance in the world’s largest economy.
President Trump’s growing interest in Intel is part of a broader agenda to reshape operations within major tech firms, particularly in the semiconductor industry.
As part of this initiative, the administration has mandated that Nvidia and Advanced Micro Devices, two key players in the artificial intelligence sector, are required to pay a 15% commission on their chip sales in China in return for export licenses.
These actions are rooted in the administration’s desire to enhance chip production in the United States, a crucial component of its trade strategy aimed at countering China’s technological advancements in artificial intelligence.
Interestingly, Trump’s earlier demands for Tan’s resignation stemmed from concerns about the CEO’s previous investments in Chinese technology firms during his time as a venture capitalist.
However, after Tan affirmed his commitment to U.S. interests in an open letter to Intel employees and met with Trump at the White House, the situation seemed to have shifted, with the president commending him for his impressive personal journey.
Intel’s current predicament is forcing it to consider the U.S. government’s potential investment. The company has been struggling following years of setbacks, particularly after missing the pivotal transition to mobile computing brought on by the advent of the iPhone in 2007.
Intel has been further challenged by the recent surge in demand for artificial intelligence technologies, where competitors like Nvidia and AMD have surged ahead.
The company reported losses amounting to nearly $19 billion last year and approximately $3.7 billion in the first half of this year, prompting Tan to initiate significant cost-cutting measures.
By the end of the current year, the workforce at Intel is projected to decrease by 25%, leaving it with around 75,000 employees.
Historically, instances of government ownership in significant private corporations are rare yet not unheard of. A prominent example occurred during the 2008 Great Recession when the government intervened with nearly $50 billion in assistance to General Motors, acquiring a roughly 60% stake in the automaker.
Despite the bailout, the government ultimately faced a loss of about $10 billion after the sale of its shares in GM.
In response to concerns about operational control, U.S. Commerce Secretary Howard Lutnick assured that the government would not interfere in Intel’s management.
The shares proposed in the deal would likely be non-voting, mitigating fears of direct governmental oversight.
Nonetheless, analysts caution that financial ties to Intel could sway companies to enhance their orders for Intel chips in a bid to maintain favorable relations with the Trump administration.
Intel has reaped substantial benefits from the Biden administration’s CHIPS and Science Act, which aimed to support domestic semiconductor production.
However, despite the support, Intel has struggled to regain its momentum and has fallen short on fulfilling commitments related to construction projects linked to the program.
So far, Intel has received about $2.2 billion of the $7.8 billion in incentives promised under the CHIPS initiative, which Lutnick criticized as a mere ‘giveaway.’
He argued that it would serve U.S. taxpayers better if those funds were transformed into equity stakes in Intel, emphasizing that getting a return on investment is the ‘right move.’
As conversations regarding the proposed stake in Intel continue, the implications of such a deal could redefine the landscape of U.S. technology and its competitive stance in the global market.
Stay tuned as developments unfold in this extraordinary intersection of government and corporate interests.
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