To advance efforts to revitalize American semiconductor manufacturing, the U.S. government is negotiating to secure a 10 percent equity position in Intel Corporation. This proposed deal would swap $10 billion in already approved grants for Intel, going back to when President Biden was first elected, in exchange for this agreement. The reality is that Intel is in very deep trouble in the semiconductor space. In 2024, the company posted its first full-year loss since 1986, accumulating an incredible $18.8 billion shortfall.
The possible investment has already raised eyebrows from a variety of interested parties, even Treasury Secretary Scott Bessent. He was clear that any US investment in Intel needed to be aimed at stabilizing the company. This investment would simultaneously ensure the production of chips remains here, in the United States. Bessent didn’t reveal how much or when the state plans to make the proposed stake. Importantly, he stressed that he has no plan to assume management of the company himself.
Intentions Behind the Investment
The debate over the equity stake has already opened an important national discussion about the appropriate role of government in private industry. To soothe those concerns, officials have explained that any equity investment will be strictly a non-voting stake. This is important because it means that the US government will not have oversight over Intel’s business decisions.
Scott Bessent added that the biggest change the proposal made was to reimagine grants as investments. This fortification would increase not only Intel’s stability, but increase chip production at home in the United States as well. This seems to suggest the goal is to strengthen domestic manufacturing capacity, not reshape corporate governance.
One of the chief architects of those negotiations, Cantor Fitzgerald’s Lutnick, cut to the chase on the logic behind the requested $109 million equity stake. He maintained, “We can’t do this unless we get an equity position on our investment.” He further stressed, “In exchange, we’re going to get equity back, not just giving out grants.”
Responses from Political Leaders
Former President Donald Trump’s administration has recently expressed its discontent with the negotiations. They claim an equity stake does not indicate that they want to operate Intel. Initially, Trump suggested that Intel’s CEO, Pat Gelsinger, should resign due to the company’s struggles. He later reversed his stance after meeting Gelsinger and acknowledged his “excellent” reputation.
Lutnick went on to stress that the purpose of government is not to regulate. Instead, it’s all about ensuring taxpayers get a direct financial return on their investment. He remarked, “It’s not governance, we are just converting what was a grant under Biden into equity for the Trump administration for the American people.”
SoftBank Group has recently agreed to invest $2 billion into Intel. This move sends a positive signal of strong confidence in the company, despite its recent woes.
Challenges Facing Intel
Intel’s travails today are the cumulative result of disastrous management decisions that have sapped its ability to compete in a brutally changing environment. As it battles with substantial financial losses and a shifting landscape dominated by rivals, the proposed government investment could provide much-needed capital and credibility.
While all parties are hopeful about the potential equity stake, stakeholders are understandably wary about its implications. The intention of the US government is to further support American manufacturing while not requiring companies to buy chips only from Intel.
