The U.S. now owns a big chunk of Intel. That’s a huge deal.

Key Takeaways

The U.S. government acquired a 10% stake in Intel, making it Intel's largest shareholder.
This deal, initiated by President Trump, is an unusual departure from traditional U.S. government industrial policy.
The CHIPS Act committed over $33 billion to incentivize domestic advanced microchip manufacturing.
Economists express skepticism towards government equity stakes in private companies due to market distortion risks.

Governments use industrial policy to boost specific industries, a practice significantly expanded under President Biden.
Billions of dollars have been directed towards green energy and microchip manufacturing sectors under this approach.

In 2022, Congress identified that the U.S. no longer manufactured the world's most advanced microchips.
Over 90% of microchips were sourced from Taiwan, prompting the U.S. government to initiate the CHIPS Act.
The CHIPS Program Office, led by Mike Schmidt, managed the distribution of $39 billion to incentivize domestic advanced chip factories.

The CHIPS Act provided unprecedented direct financial support to individual, healthy companies.
To mitigate risks, the program hired industry experts, including a former Goldman Sachs technology investment banker.
The $39 billion in funding was disbursed incrementally, with stringent conditions tied to milestones like factory structures and equipment installation.

The initial CHIPS Act deal with Intel involved nearly $8 billion in subsidies for new factories across multiple states.
President Trump, expressing dissatisfaction with existing CHIPS Act deals, demanded Intel CEO Pat Gelsinger's resignation in August 2025.
Trump subsequently announced a new deal where Intel would give the U.S. government a 10% stake, valued at nearly $10 billion, in exchange for roughly $6 billion in subsidies.

Intel faced difficulties including falling technology, plummeting sales, and workforce reductions.
The Trump administration offered a solution, allowing Intel to receive remaining CHIPS Act funds in exchange for a government equity stake.
This move made the U.S. government Intel's largest shareholder and reportedly boosted Intel's stock.

Economics professor Ann Harrison warns that increased government micromanagement and partial state ownership can lead to poor economic outcomes by insulating firms from competition.
She cites China's past struggles with state-owned enterprises as a cautionary example of this approach.
The Intel deal, characterized by preemptive intervention with no defined end date, carries a risk of the company becoming 'too important to fail,' potentially harming the broader semiconductor industry.