The U.S. government plans to take a 10% stake in Intel, President Donald Trump told reporters on Friday. The news pushed the semiconductor chip company’s stock up more than 7%. Trump stated that Intel has agreed to the proposal, while Intel itself declined to comment.
This development comes during a pivotal and recently volatile time for Intel. CEO Lip-Bu Tan is currently restructuring the chipmaker, shuttering certain divisions and laying off workers in a bid to focus on its core businesses and catch up to rivals like Nvidia.
Earlier this month, Trump pushed for Tan to resign because of perceived conflicts of interest. Tan later met with Trump to find a way to assuage the president and figure out ways for the company and government to work together.
While speaking to the White House press pool, Trump acknowledged the push for resignation. According to emailed comments from the press pool, Trump said he told Tan that the United States should be given 10% of Intel, to which Tan responded he would consider it. Trump explained that he believed Intel had been left behind compared to competitors like Nvidia and its leader Jensen Huang. Trump stated that he thought having the United States as a partner would be good for Intel, and that the company ultimately agreed to the deal, which he believes is great for both parties.
Such federal government ownership of a major corporation would mark a dramatic departure from long-standing U.S. policy. Government equity stakes in private companies are extremely rare in the U.S. and highly controversial. Notable exceptions occurred during the 2008-2009 financial crisis when the government took temporary ownership stakes in companies like General Motors, AIG, and a few major banks to prevent economic collapse. The government systematically sold those stakes back to private investors in the following years.
The Intel deal, which is expected to be announced later Friday, comes days after the Japanese conglomerate SoftBank agreed to make a $2 billion investment in Intel. That deal was presented as a commitment to advanced technology and semiconductors in the U.S. Under the agreement, SoftBank agreed to buy Intel common stock at $23 per share. Intel shares were trading around $25 on Friday afternoon.