The Trump administration will invest $8.9 billion in Intel in exchange for a 9.9% equity stake, making the U.S. government the chipmaker’s largest shareholder.

The funding—part of previously allocated CHIPS Act money—comes with strings attached, including a 17.5% discount on shares and a five-year warrant for additional equity if Intel fails to maintain majority control of its foundry business.

Despite the capital infusion, analysts remain skeptical about Intel’s ability to compete in the contract chipmaking market.

CEO Lip Bu Tan has warned the company may exit its foundry business without major customer commitments for its advanced 14A and 18A manufacturing processes.

Summit Insights analyst Kinngai Chan emphasized that “no government investment will change the fate of its foundry arm if they cannot secure enough customers.”

The investment reflects Washington’s strategic priority to rebuild domestic semiconductor capabilities amid intense competition with TSMC and Nvidia.

However, the terms indicate tempered government confidence—Intel receives no new funding beyond previously promised CHIPS Act grants, and the stake comes with voting agreements that maintain board independence but introduce government oversight.

Intel shares rose 5.5% on the news but fell 1% after hours as details emerged. The company continues its $100 billion U.S. factory expansion while implementing cost-cutting measures, including significant job cuts.

The SoftBank’s recent $2 billion investment provides additional capital but underscores the same fundamental challenge: transforming Intel’s manufacturing business requires commercial success, not just government support.

The deal represents an unprecedented level of government involvement in a private semiconductor company, blending industrial policy with market dynamics.

While providing short-term financial relief, it highlights Intel’s precarious position as it attempts to reclaim technological leadership while navigating geopolitical pressures and intense global competition.

Source: Reuters.