A few days ago, news broke that following a meeting with Intel CEO Lip-Bu Tan, the Trump administration was looking to take an unspecified stake in Intel. Now, Bloomberg says the number being discussed is around $10.5 billion. Here are the details.
Not what the market seemed to be expecting
Intel stock slid today, following Bloomberg‘s report that the Trump administration was considering converting Intel’s $10.9 billion CHIPS Act funding into an equity stake, potentially giving the U.S. government a roughly 10% share in the company.
Interestingly, investors had initially welcomed the idea of a federal investment last week, sending Intel stock to its best weekly rally since February. But shares slipped today after Bloomberg reported details of the potential CHIPS-to-equity plan, indicating a less-than-ideal arrangement in the eyes of the market.
For context, Intel was awarded $10.9 billion in CHIPS and Science Act grants in 2022, for both commercial and defense-related semiconductor manufacturing.
Bloomberg’s sources say the government is considering turning some or all of that grant money into equity. A 10% stake in the company would cost, at current market value, around $10.5 billion, and would make the government Intel’s largest shareholder.
The report also says that the plan hasn’t been finalized, and the exact size of the stake could still change.
CHIPS-to-equity could accelerate funding, without increasing it
That’s because under current rules, CHIPS Act grants are released gradually as companies hit agreed-upon milestones. So this approach would likely just mean a faster timeline for Intel, rather than more actual money.
As of January, Intel had received $2.2 billion, but it’s unclear whether that initial tranche would count toward any equity conversion, or whether additional funds have been disbursed since President Trump took office.
What’s your take on the idea of the U.S. government becoming Intel’s largest shareholder? Let us know in the comments.
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