Trump publicizes acquisition of a 10% share in Intel, the troubled semiconductor corporation
In a move aimed at bolstering domestic tech production, the U.S. government has secured a 10% stake in Intel, one of the world's leading semiconductor manufacturers. This significant investment aligns with President Trump's push to bring production back to the U.S., a focal point of the ongoing trade war.
The U.S. government now holds 433.3 million shares of non-voting stock in Intel, acquired through the conversion of $11.1 billion in previously issued funds and pledges. The shares were purchased at a price of $20.47 each, lower than the closing price of $24.80 on the day of the deal, making the U.S. government one of Intel's largest shareholders.
The acquisition of this 10% stake is noteworthy because before the US government's involvement, the company had not sold this portion to any other investor. Instead, the US government received newly issued shares directly from Intel as part of a transaction authorized under the CHIPS Act, a legislative initiative that played a role in the acquisition.
The current CEO of Intel, Lip-Bu Tan, has only been on the job for slightly more than five months. However, his past investments in Chinese companies raised earlier national security concerns. Nancy Tengler, CEO of money manager Laffer Tengler Investments, abandoned Intel due to the numerous challenges facing the company.
The layoff of more than 20,000 workers by Intel is currently underway. Critics view the deal as a troubling cross-pollination between the public and private sectors that could harm the tech industry. There are concerns that tech companies may feel pressured to buy potentially inferior chips from Intel to curry favor with Trump during the ongoing trade war.
However, the president believes the U.S. will be better positioned to maintain its technological lead over China in the race to develop artificial intelligence by reducing the country's dependence on chips manufactured overseas. The U.S. Commerce Secretary, Howard Lutnick, stated that America should benefit from the funding pledged to Intel. Approximately $7.8 billion was pledged to Intel under the incentives program, but only $2.2 billion had been funded to date. Another $3.2 billion of the government investment is coming through the funds from another program called "Secure Enclave."
As the deal unfolds, it remains to be seen how this significant investment in Intel will impact the tech industry and the ongoing trade war.
