The US government will acquire 9.9 percent of Intel’s shares in exchange for previously granted subsidies.
Intel is selling 9.9 percent of its shares to the US government in exchange for $11.1 billion. It’s difficult to call this a real sale. The US is acquiring the shares in exchange for planned and already paid subsidies under the American CHIPS Act.
The agreement aligns with President Trump’s policy vision, where all decisions are made as if they were zero sum deals: the pie to be divided is finite, one plus one is never more than two, and there’s no such thing as a free lunch. As a result, Intel must surrender a significant portion of its shares to the government in exchange for subsidies it had already been allocated. This effectively transforms the money from a de facto subsidy into a purchase amount.
Chasing China
The US is increasingly transforming into a pot calling the kettle black. The American government criticizes the connection between Chinese technology companies and their government, citing this connection as a major catalyst for espionage and untrustworthiness. Yet on the home front, the US is now taking steps to establish the same kind of interconnectedness.
The capital injection also relates to Intel Foundry. The US has the option to acquire another five percent of Intel’s shares if the company’s ownership in the Foundry division falls below 51 percent. The US wants to keep Intel’s strategically important chip production on domestic soil, even though the commercialization of the company’s manufacturing capabilities isn’t going smoothly.
Intel portrays the deal as an investment in the company’s future. The fact is that Intel is currently in a weak position and could use external funding. Earlier, Softbank already acquired a stake in the company with a two billion dollar investment. In an attempt to regain tight financial control, tens of thousands of jobs have already disappeared along with international expansion plans.
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Passive Ownership
The US promises to remain a passive owner. The government will (for now) not get a seat on the board of directors. The intention is that the US will always vote in line with Intel when necessary. What this promise is worth will be revealed in the future. President Trump previously called for the dismissal of Intel CEO Lip-Bu Tan only to reverse course after a personal conversation. Both the demand and its withdrawal show neither consistency nor passivity regarding the vision for Intel.