Uncle Sam Eyes Slice Of Intel In Return For CHIPS Act Cash

The US government is considering taking a stake in Intel and other semiconductor companies that benefit from CHIPS Act funding, according to officials from the Trump administration. The move follows SoftBank's $2 billion investment in the faltering chip giant.

Commerce Secretary Howard Lutnick said that Intel would be required to give the federal government an equity stake in the company in return for its CHIPS Act subsidy cash, which was granted last year under the previous administration.

Intel finalized its agreement with the Commerce Department last November, a deal that would see it receive up to $7.86 billion to help fund its semiconductor fabrication plants and advanced packaging projects at sites in Arizona, New Mexico, Ohio, and Oregon.

"We should get an equity stake for our money," Lutnick told CNBC. "So we'll deliver the money, which was already committed under the Biden administration. We'll get equity in return for it," he added.

The move appeared to be confirmed by White House Press Secretary Karoline Leavitt, but she later walked back the claim to say that the government was "working on it" and "ironing out the details," as part of efforts to bring critical supply chains back to US soil while also gaining something from the deal for the American taxpayer. The Register asked Intel to comment.

But Intel is not the only semiconductor biz to be awarded grants or subsidies under the CHIPS Act. Memory chipmaker Micron scored $6.1 billion toward the development of its new facilities in New York state and Idaho, while Taiwanese silicon giant TSMC secured $6.6 billion to expand its manufacturing presence on US soil. Other beneficiaries include Samsung and GlobalFoundries.

According to Reuters, a White House official confirmed that Lutnick is also looking into the US government receiving equity stakes in these companies in exchange for their CHIPS Act funding.

If true, this would be an unusual step for the US government to take, using taxpayers' money to acquire a stake in private businesses, and has been likened by some observers to communism.

However, the Trump administration has a certain degree of ambivalence toward the CHIPS Act program, which was aimed at boosting America's semiconductor manufacturing capabilities.

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Earlier this year, the president called for the CHIPS Act to be scrapped, and suggested that any remaining funds not disbursed should instead be used to help pay off national debt. House Speaker Mike Johnson also suggested last year that the Republican party would move to repeal the bill that enacted the program, before later backtracking on the claim.

More recently, Lutnick had suggested that the agreements covering CHIPS Act funding would be renegotiated to encourage the recipient firms to invest more in US manufacturing themselves, saying that taxpayers were not getting good value for their money.

All of this makes for an interesting time for Intel, which saw Trump recently call for the immediate resignation of chief executive Lip-Bu Tan over his alleged connections with the Chinese government, only for the president to change his tune after a face-to-face meeting with Tan at the White House.

The Lip-Bu Tan controversy followed more losses for the chip giant during the second quarter of this year, as the company strives to turn its fortunes around. But this hasn't deterred Japanese investment biz SoftBank from sinking $2 billion into the Silicon Valley stalwart this week, framing it as a vote of confidence in Intel's ability to recover from its woes. ®