On Friday afternoon, Intel officially announced an agreement with President Donald Trump’s administration. This followed a statement from Trump that the government would be taking a 10% stake in the struggling chipmaker.
While Intel states the government is making an $8.9 billion investment in Intel common stock, the administration does not appear to be committing new funds. Instead, it is simply making good on what Intel described as grants previously awarded, but not yet paid, to the company.
Specifically, the $8.9 billion is supposed to come from $5.7 billion awarded to Intel under the Biden administration’s CHIPS Act that had not been paid out, as well as $3.2 billion awarded by the Biden administration through the Secure Enclave program.
In a post on his social network Truth Social, Trump wrote that the United States paid nothing for these shares. Nonetheless, he described this as a great deal for America and also a great deal for Intel.
Trump has been critical of the CHIPS Act, calling it a horrible, horrible thing and calling on House Speaker Mike Johnson to get rid of it. In a regulatory filing in June, Intel said that while it had already received $2.2 billion in CHIPS Act funding, it had subsequently requested an additional $850 million in reimbursement that the government had not yet paid.
According to The New York Times, some bankers and lawyers believe the CHIPS Act may not allow the government to convert its grants to equity, opening this deal to potential legal challenges.
In addition to his targeting of the CHIPS Act, earlier this month Trump also accused Intel CEO Lip-Bu Tan of conflicts of interest and said he should resign immediately. The president was more positive about Tan on Friday, saying on Truth Social that he negotiated this deal with Lip-Bu Tan, the highly respected chief executive officer of the company.
For his part, Tan said in a statement that the company is grateful for the confidence the president and the administration have placed in Intel, and they look forward to working to advance U.S. technology and manufacturing leadership.
Intel’s announcement also says the government’s investment will be passive, with no board seats or other governance and information rights.