One week ago, in the immediate aftermath of the Trump vs Intel snafu (which lasted just a few days, until Lip-Bu Tan showed up at the White House and became BFFs with Trump), we said that it is likely that the US government would take a stake in Intel, the same way it the Defense Department did with MP Minerals (a move which we also correctly predicted), becoming the largest shareholder in the rare earth minerals company.
We were right.
According to Bloomberg, the Trump administration is in talks with Intel Corp. to have the US government potentially take a stake in the beleaguered chipmaker, helping support the company’s effort to expand domestic manufacturing, according to people familiar with the plan who may have been keeping a close eye on our X account in recent days.
The deal would help shore up Intel’s planned factory hub in Ohio. The company had once promised to turn that site into the world’s largest chipmaking facility, though it’s been repeatedly delayed. The size of the potential stake isn’t clear.
The plans reportedly were prompted from a meeting this week between President Donald Trump and Intel CEO Lip-Bu Tan. The idea is for the US government to pay for the stake and details are being sorted out, one of the people said. Another cautioned that the plans remain fluid.
Needless to say, news of the proposed minority investment sent Intel shares soaring, erasing all of the company's post-earnings losses.
In response to a Bloomberg request for comments, Intel said that “we look forward to continuing our work with the Trump administration to advance these shared priorities, but we are not going to comment on rumors or speculation."
Any such (much needed) agreement would bolster Intel’s finances at a time when the company has been slashing spending and cutting jobs. It also suggests that Tan will remain at Intel’s helm. Trump had called for his ouster before the meeting over concerns about Tan’s ties to China.
It’s the latest direct intervention by Trump into a key industry. Earlier this week, the Trump admin reached an agreement to receive a 15% cut of certain semiconductor sales to China and took a so-called golden share in United States Steel Corp. as part of a deal to clear its sale to Japan's Nippon Steel.
More importantly, and just as we said it would, Bloomberg writes that "the Intel idea also echoes the Defense Department’s unprecedented announcement last month that it will take a $400 million preferred equity stake in the little-known US rare-earth producer MP Materials Corp. — a deal that would make the Pentagon the company’s largest shareholder. That move turned conventional wisdom on its head among investors, analysts, industry executives and even longtime government officials in terms of how private industry has dealt with the government."
Not too long ago, Intel was the undisputed world chip industry leader, but it has struggled in recent years, hurt by the loss of market share and its technological edge. Tan’s predecessor, Pat Gelsinger, touted the Ohio factory expansion as part of a comeback plan. But Intel’s financial woes have imperiled the project. Earlier this year, the build-out was delayed until the 2030s, and the company said in July that it would further slow the Ohio plan. Since taking over in March, Tan has focused more on getting Intel’s financial house in order.