The US government is investing $8.9 billion in chip manufacturer Intel. In return, the government will receive a 9.9% stake in the company. The investment is intended to accelerate US technology and manufacturing leadership.
The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.
Under the terms of announcement, the Trump administration is purchasing 433.3 million primary shares of Intel common stock at a price of $20.47 per share, equivalent to a 9.9 percent stake in the company.
This investment provides American taxpayers with a discount to the current market price while enabling the U.S. and existing shareholders to benefit from Intel’s long-term business success.
The agreement also includes a warrant for the government, allowing it to acquire an additional 5% of the shares if Intel loses its majority stake in the foundry division.
“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American made,” said Lip-Bu Tan, CEO of Intel.
He thanked President Trump for his focus on domestic chip production, which he said is integral to the country’s economic and national security. Tan had been under pressure from Trump in recent weeks , partly because of his ties to China, but that is no longer the case but now the dust has settled.
The government’s investment in Intel will be a passive ownership, with no Board representation or other governance or information rights. The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions.
The government’s investment is part of a broader strategy to strengthen the US semiconductor industry. The government considers this essential for national security and leadership in technologies like artificial intelligence. Other key leaders from technology companies such as Microsoft, Dell Technologies, HP, and Amazon Web Services (AWS) also expressed their support for the partnership.
Intel has continued to strategically invest in research, development and manufacturing in the United States, investing $108 billion in capital expenditures and $79 billion in R&D over the last five years.
The company’s newest chip fabrication site in Arizona is expected to begin high-volume production later this year, featuring the most advanced semiconductor manufacturing process technology in U.S. soil.
