• Economics
• Science and Technology
• United States
• Rishi Iyengar

August 27, 2025, 3:46 PM View Comments ()

The United States is now the biggest shareholder in one of its biggest semiconductor companies.

U.S. President Donald Trump announced on Aug. 22 that the U.S. government has taken a direct stake in Intel worth around $11 billion, representing a roughly 10 percent stake in the chip-manufacturing giant. Intel will issue the requisite shares to the Commerce Department, according to a regulatory filing by the company announcing the deal.

The agreement with Intel is the latest instance of Trump cutting a deal with private companies in exchange for government action or regulatory relief. But it does so in a way that experts say is unprecedented and potentially troubling. 

Here’s what you need to know.

Where is the money coming from? 

In Trump’s telling, the U.S. government “paid nothing” for the shares, but Intel is still technically getting taxpayer dollars. 

Intel explained that the share sale will be funded in large part by grants given or promised to the company under the CHIPS and Science Act—one of the signature policies of Trump’s predecessor, former President Joe Biden, aimed at bringing chip factories back to U.S. shores. 

The Biden administration awarded Intel nearly $8 billion last November, adding to another $3 billion pledged to the company through a Defense Department program, known as Secure Enclave, to make chips for the U.S. military. 

But Intel has only received $2.2 billion of that funding thus far, with the Trump administration effectively taking the 10 percent stake in exchange for releasing the rest. “We agreed that it would be fair that the same money that you give a company, America should have shares for it, because it’s just fair,” U.S. Commerce Secretary Howard Lutnick said while sitting with Intel CEO Lip-Bu Tan on Aug. 25. 

How did the deal come about? 

Trump said that he negotiated the deal with the company’s “Highly Respected Chief Executive Officer,” leaving out the fact that he had called for Tan’s immediate resignation just three weeks earlier over the Intel CEO’s alleged investments in several Chinese companies. “There is no other solution to this problem,” Trump had posted at the time. 

But a subsequent meeting between Trump and Tan at the White House appears to have fixed the problem—and resulted in the U.S. government becoming Intel’s largest shareholder. 

“I said, ‘I’d like you to give 10 percent of Intel to the United States of America, not to me, to the United States of America.’ And I said, ‘If you have them as a partner, you have the United States as a partner.’ I think that would be a very good thing for Intel,” Trump told reporters on Monday, recounting his meeting with Tan. “And he thought about it a little bit different, and he said, ‘I like that idea very much. We have a deal.’”

It’s not clear whether Trump has asked Tan to divest any of his Chinese investments as part of the deal, however. In a statement earlier this month, Tan referred to reports of those investments as “misinformation” and said he had “always operated within the highest legal and ethical standards.” Intel did not immediately respond to Foreign Policy’s request for clarification.

Why Intel? 

Intel emerged as one of the U.S. tech industry’s foremost champions in the decades since its founding in 1968, in a then-nascent Silicon Valley, dominating the global semiconductor and computing industry through its heyday in the 1990s and early 2000s. More recently, however, the company has fallen on relatively hard times that predate both its current CEO and the current U.S. president. 

Intel fell behind industry leaders such as the Taiwan Semiconductor Manufacturing Company (TSMC), Samsung, and Nvidia, whose chips were tailor-made for the artificial intelligence boom that has swept the globe over the past few years. Intel’s stock has lost more than half its value in the last five years, and Pat Gelsinger, who took over the company as CEO in 2021 to try and turn it around, was reportedly forced into an early retirement last December. 

Tan, a semiconductor industry veteran who quit Intel’s board months before Gelsinger stepped down, was tapped last March to replace him and lead a turnaround of his own. In a July memo to employees, Tan said the company plans to cut its global workforce by 25,000 employees this year.

“He came in under a little bit of a cloud,” Trump said of Tan on Monday. “With a company like Intel—as you know, it’s had difficulty—I want them to do well. I want them to do well anyway, but I want them to do well in particular now.” 

Intel’s struggles notwithstanding, the company still has a market value of more than $100 billion and is seen as important to Trump’s goal of revitalizing U.S. semiconductor manufacturing. “I think the government is really hoping that if an American company is going to make leading-edge chips, it’s going to be Intel,” said Nazak Nikakhtar, a partner at the law firm Wiley Rein and who served in the Commerce Department during the first Trump administration. 

Will the Trump deal actually fix Intel’s problems?

It’s not clear if the recent deal will revitalize Intel. As Trump himself hinted, the U.S. government isn’t injecting additional cash into the company beyond what the Biden administration had already promised. 

“I don’t think that it’s a bailout,” said Sarah Bauerle Danzman, a professor at Indiana University Bloomington and a nonresident senior fellow at the Atlantic Council. “Yes, Intel has problems, but it’s not giving Intel a huge injection of cash … There is a sense that perhaps this means that in the future, the U.S. government will do that. But there’s nothing that we have seen that guarantees that.”

There’s also a chance that the deal ends up hurting Intel, as the company itself laid out in an updated regulatory filing. Trump’s decision to have the United States become Intel’s biggest shareholder could limit the company’s ability to secure future government grants (or force it to give up more equity for those grants), the filing said. The U.S. government’s part ownership of Intel could also pose regulatory issues for its dealings with other governments, the company said, pointing out that 76 percent of its sales last year came from outside the United States. 

So why is Trump doing this? 

Cutting deals with private companies for government intervention has been a feature of the second Trump term, with administration officials arguing that the U.S. government needs to get a greater return on its investments of taxpayer dollars. It’s the same impulse that prompted Trump to order the organization of a U.S. sovereign wealth fund early on in his term (though that hasn’t materialized yet).

Trump has drifted further into state capitalism as economic policy in recent weeks, signing a deal for the Pentagon to take a 15 percent stake in MP Materials, a rare-earth mining company, as well as taking a so-called “golden share” for himself personally in U.S. Steel as part of its buyout by Japanese rival Nippon Steel. 

The Intel deal is also Trump’s second attempt in as many weeks to direct more revenue toward the U.S. government from semiconductors, a hugely important and strategic industry that both Trump and Biden realized is vital to winning a technological great-power competition with China. In mid-August, Trump cut a deal with Nvidia and AMD to let them sell semiconductors to China, which was banned previously, in exchange for the U.S. government getting 15 percent of all Chinese sales.

“I think that the U.S. government is very wary—in particular in the semiconductor sector—of giving awards and then companies essentially not being able to execute, and the delivery of taxpayer dollars ends up evaporating,” said Nikakhtar. “At the same time, [the Intel deal] is unprecedented.”

Bauerle Danzman posited a more straightforward explanation: that Trump is taking a U.S. government stake in Intel simply because he can. “The tools being used are different but the overall view of presidential power and what he’s trying to do is similar, which is that he views the president’s, and therefore the U.S. government’s, position vis-à-vis these companies as very strong,” she said. “Because these companies need the approval of the U.S. president in order to be able to continue to operate in the way that they want to operate, and so he views it as just that he has the power to command these taking and so is going to do it.”

Trump himself gave credence to that argument. “I want to try and get as much as I can,” he said on Monday. “If people come in and they need something—as an example, as a real estate person, if I have an agreement and I have any form of a stopgap, where I can stop somebody from doing something, right? I have a covenant and an agreement, and they come to me and they say, ‘I would like you to, I would like to do something, but you have us restricted.’ If I do that, they usually have to pay.”

Is this legal? 

It’s unclear. Congress controls the government purse strings, and any spending would need congressional approval. The CHIPS Act, under which grants have been disbursed to Intel, has already been approved by Congress, but the law doesn’t expressly allow for parlaying those grants into an equity stake. 

“We’re in a really gray zone, where Congress hasn’t expressly authorized the government to take shares in companies,” said Nikakhtar, who pointed out that the government bailout of the struggling automakers General Motors and Chrysler during the 2008 financial crisis was sanctioned on a strictly temporary basis to prevent them from collapsing. “The Constitution seems to suggest that it’s only allowable when Congress authorizes it,” she added. 

Trump provided a window into his thinking on that question on Monday, albeit in the context of his desire to rename the Defense Department to the War Department and the congressional approval required to do so. “We’re just going to do it, I’m sure Congress will go along,” Trump said. 

As for the Intel deal, Trump also indicated that it’s not likely to be the last of its nature. “Now in the case of Intel it was interesting, but I hope I’m going to have many more cases like it,” he said.