The U.S. Government Takes a 10% Stake in Intel: A Rare Move with Significant Risks
In a move that’s raising eyebrows across Wall Street and Washington, the U.S. government has acquired nearly a 10% stake in Intel, marking one of the boldest interventions in a private U.S. company in decades. Announced on August 22, 2025, the deal converts billions in federal grants into equity, aiming to bolster America’s semiconductor industry amid fierce global competition. While supporters hail it as a smart investment in national security, critics warn it blurs the lines between government and business, potentially leading to inefficiency and political meddling. As the Trump administration pushes for more such arrangements, the Intel agreement underscores a shifting economic strategy that’s as ambitious as it is controversial.
The specifics of the deal are straightforward but unprecedented in scope. Under the agreement, the U.S. government will purchase 433.3 million shares of Intel common stock at $20.47 per share, totaling an $8.9 billion investment and giving it a 9.9% stake in the company. This funding comes from $5.7 billion in previously awarded but unpaid grants under the 2022 CHIPS and Science Act—designed to onshore semiconductor manufacturing—plus $3.2 billion from the Department of Defense’s Secure Enclave program, bringing the total government commitment to $11.1 billion when including $2.2 billion already disbursed. Intel, the Santa Clara, California-based chip giant, confirmed the terms in a press release, noting the government’s stake will be passive, with no board seats, governance rights, or special information access. The U.S. has also pledged to vote its shares in line with Intel’s board on most matters, though limited exceptions apply. Additionally, the deal includes a five-year warrant for another 5% of shares if Intel’s ownership in its foundry business drops below 51%.
President Donald Trump touted the agreement during White House remarks on August 22, crediting a recent meeting with Intel CEO Lip-Bu Tan. “I said, ‘I think it would be good having the United States as your partner.’ He agreed, and they’ve agreed to do it,” Trump said, adding that it provides “$10 billion for the United States.” Commerce Secretary Howard Lutnick echoed the enthusiasm on X, calling it a “historic agreement” that “strengthens U.S. leadership in semiconductors, which will both grow our economy and help secure America’s technological edge.” Tan, in Intel’s statement, emphasized the company’s role as “the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S.,” reaffirming its commitment to American-made technologies.
To grasp the rarity of this step, consider the historical context. Government equity stakes in private firms are typically reserved for crises, like the 2008-2009 financial bailout where the U.S. took ownership in General Motors, Chrysler, and AIG to prevent collapse—stakes later sold off at a net loss to taxpayers of about $10 billion for GM alone. During World War I, President Woodrow Wilson nationalized railroads and mines temporarily for national security. More recently, the Biden-era CHIPS Act provided grants to Intel and others to counter China’s dominance in chip production, where Taiwan’s TSMC and South Korea’s Samsung lead in advanced manufacturing. Intel, once a Silicon Valley powerhouse that pioneered the microprocessor, has struggled lately. It missed the smartphone and AI booms, posting a $18.8 billion annual loss in 2024—its first since 1986—and plans to cut 15% of its workforce while delaying projects like a $28 billion Ohio plant. The deal follows Trump’s earlier call for Tan’s resignation over alleged China ties, resolved after a White House meeting, and comes amid broader administration efforts, like securing 15% revenue shares from Nvidia and AMD on China chip sales.
Experts are divided on the implications. Proponents, including some progressives like Sen. Bernie Sanders, argue it ensures taxpayer returns on investments in critical tech. “If microchip companies make a profit from generous grants… taxpayers have a right to a reasonable return,” Sanders posted on social media. Peter Harrell, a former Biden White House economic advisor, noted bipartisan support for reshoring chips but questioned if equity is the “most effective way,” citing risks of politicization that could stifle innovation. Chris Miller, author of Chip War and Tufts professor, highlighted uncertainties: “One of the questions… is how this relates to who’s going to be the customer for Intel’s factories.”
The risks are multifaceted. Financially, Intel’s shares rose 6% post-announcement but have declined over 50% in five years, leaving taxpayers exposed if the company falters further. Critics like Sen. Rand Paul decry it as a “step toward socialism,” while economists warn of cronyism, insider trading risks, and distorted markets—echoing concerns from the 2008 bailouts but without a clear crisis. Conservative voices, including former VP Mike Pence and economist Larry Kudlow, express discomfort with “state capitalism,” fearing long-term ownership erodes free enterprise. Intel’s filing notes potential “adverse reactions from investors, employees, customers,” and dilution for shareholders. Broader impacts could include pressure on competitors to favor Intel or more deals in defense and tech, as Lutnick hinted at pursuing stakes in Pentagon contractors. Trump has pledged “many more” such transactions, signaling an era of industrial policy that could reshape U.S. business norms.
Looking ahead, the deal awaits final approvals, with Intel reaffirming its $100 billion U.S. expansion plans. Watchdogs may scrutinize for conflicts, and investors could see volatility if more interventions follow. Legal challenges or congressional oversight might also emerge, given the removal of CHIPS Act milestones.
This Intel stake represents a high-stakes gamble on American innovation, blending national security needs with uncharted economic territory. For taxpayers and businesses alike, it serves as a cautionary tale: While it could secure U.S. tech leadership, the risks of overreach remind us that government involvement in markets demands careful balance to avoid unintended consequences.