US invests 8.9 billion in Intel with 10 percent stake
The United States government has taken a nearly 10 percent stake in Intel through an $8.9 billion investment, marking one of the largest federal interventions in a private American company in over a decade. The equity purchase will make the government the third-largest shareholder in Intel, behind BlackRock and Vanguard, and signals the administration’s determination to reshape the future of domestic semiconductor production.
The deal comes at a critical moment for Intel, once considered the cornerstone of American chipmaking but now struggling to regain lost ground against rivals such as Taiwan Semiconductor Manufacturing Company and Nvidia. Despite investing heavily in domestic manufacturing capacity, Intel has endured six consecutive quarters of net losses and continues to trail in key markets, particularly in artificial intelligence processors. The investment is intended to support the company’s turnaround while reinforcing U.S. technological leadership in a sector deemed vital for economic competitiveness and national security.
Funding for the equity purchase derives from $5.7 billion in unallocated grants previously awarded to Intel under the CHIPS and Science Act, combined with $3.2 billion designated under the Secure Enclave program. Intel’s total support from the federal government now stands at more than $11 billion, including $2.2 billion already disbursed. As part of the agreement, the government receives 433.3 million Intel shares at $20.47 per share, representing a discount to market value. It will also receive a five-year warrant to acquire an additional five percent of the company should Intel fall below majority control of its foundry business.
The equity stake is structured as a passive ownership with no board representation. The government has agreed to align its voting rights with Intel’s board on most shareholder matters, with limited exceptions. While this arrangement avoids direct governance influence, it establishes Washington as a significant institutional investor in a critical technology company, reviving debates over whether Intel may now be considered too important to fail.
Analysts remain divided over the impact of the deal. While some argue that government backing provides Intel with stability and capital to advance its foundry expansion, others emphasize that funding alone will not resolve the company’s structural challenges. Intel’s ability to secure external customers for its advanced 14A and 18A manufacturing processes remains in doubt, with reports of ongoing yield problems that threaten the competitiveness of its production technology. Without meaningful adoption from major clients, the economic viability of Intel’s foundry operations is uncertain despite government support.
Intel is pressing ahead with plans to invest more than $100 billion in U.S. factory expansion, including new facilities in Arizona, Ohio, New Mexico, and Oregon. However, the government’s conversion of grants into equity highlights a shifting approach, turning subsidies into ownership rather than outright aid.
