On August 22, Intel confirmed in a press release that it agreed to give a 10% stake of its company to the United States federal government in exchange for $8.9 billion in funding. Of this amount, $5.7 billion was set to come from its CHIPS Act allocation, and $3.2 would come from the government’s Secure Enclave program.
As Americans are aware, our government taking a stake in U.S. business isn’t something that happens often. It’s so rare, that I had to Google the last time it happened. Although small instances have occurred since, the last major event seemed to be in 2008 – when giants like Chrysler, General Motors, and AIG were deemed “too big to fail” during the Great Recession.
It’s possible that the same rhetoric applies to Intel today. As the U.S. reshores key elements of semiconductor manufacturing to reduce reliance on China, allowing the country’s only advanced logic chipmaker to fail could severely impede progress, making the country more vulnerable to national security threats.
It’s well documented that Intel has been struggling for quite some time. Phil Garrou’s Insights From the Leading Edge (IFTLE) series has been following the company’s saga closely. On September 1, Garrou noted Intel’s sixth consecutive quarterly loss, totaling $1.25 billion during Q2 2025. In the same article, Garrou also mentioned that Intel may have lost its AI market share to Nvidia.
Coincidentally, on September 18, Nvidia announced that it had invested $5 billion to acquire a stake in Intel, with the goal of combining its own expertise with Intel’s manufacturing abilities to usher “the next era of computing.” The company’s CEO, Jensen Huang, said this has been in the works for nearly a year.
With two new and unlikely partnerships to contend with, it’ll be interesting to see whether either of them will become the lifeline that Intel so desperately needs.
What This Could Mean for Other CHIPS Act Recipients
I think it’s accurate to say that Intel’s arrangement could set a precedent for future government and business relationships. Based on the information that’s publicly available, it seems that the Intel stake may potentially lead to more instances of direct government ownership.
On August 25, U.S. National Economic Council Director, Kevin Hassett, told CNBC News that the Intel investment was “a very, very special circumstance because of the massive amount of CHIPS Act spending that was coming Intel’s way.” He further explained that at some point, “he’s sure” there will be more transactions in the semiconductor industry or others.
Hassett later referenced the administration’s Intel investment as part of a broader strategy to create a sovereign wealth fund that could include additional companies.
Meanwhile, Reuters reported that U.S. Commerce Secretary, Howard Lutnick, is looking into similar deals with Micron, TSMC, and Samsung. Like Intel, much of their CHIPS Act allocations has not yet been dispersed.
It’s not yet clear whether any of these deals with other semiconductor giants will take hold, but the conversations do appear to be in the works.
Securing the Semiconductor Supply Chain
A primary motivator behind the administration’s Intel stock purchase and pursuit of other ownership opportunities is to strengthen domestic chip manufacturing faster than what the CHIPS Act could allow for. Despite political controversy surrounding direct company ownership, the bipartisan support for reshoring semiconductor manufacturing seems to remain.
“Taking an equity stake in Intel may or may not be the right approach, but one thing is clear: allowing cutting-edge chips to flow to China without restraint will erode the value of any investment we make here at home,” said democratic Senate Select Committee on Intelligence Vice Chairman, Mark R. Warner. “We need a strategy that protects American innovation, strengthens our workforce, and keeps the technologies of the future firmly in American hands.”
Instead of acquiring its remaining $5.7 billion in CHIPS Act funds periodically as previously directed by the Biden administration, Intel’s CFO, David Zinser, confirmed that the company had received the entirety of this amount in late August. With these funds, Intel will continue to grow its manufacturing capacity within the U.S. and fulfil its Secure Enclave obligations.
Regardless of its financial setbacks, Intel has made steady progress on its Arizona expansion projects, although progress on its Ohio facilities has slowed. Scheduled for completion later this year, its Ocotillo facility in Chandler, Arizona will soon be home to some of the country’s most advanced semiconductor manufacturing process technology.
However, Intel’s customer base still remains a concern. If Intel continues to struggle to attract enough business to make its fabs worthwhile, the company could risk failure just the same. It’s also unclear how long the government plans to hold its share of Intel, which may complicate matters further down the line.
Final Thoughts
Although government intervention has happened in the U.S. before, it’s typically for short periods of time. Based on statements made by authorities within the administration, it appears that taking ownership of Intel is part of a longer-term strategy to acquire additional ownership in other companies.
As of now, I think it’s too soon to tell if this was the right approach, but I’m hopeful its agreement with the government, as well as its partnership with Nvidia, will help boost Intel and thereby strengthen our domestic semiconductor industry. Even though it’s theoretically impossible to reshore every facet of manufacturing back to the U.S., I agree that it makes sense to bring back what we can.
To me, the biggest benefit of the administration’s 10% stake is Intel’s receipt of its $5.7 allocation up front, allowing it to move forward with its expansion projects with fewer hurdles. Although this doesn’t guarantee that its fabs will generate a significant enough customer base, having access to additional capacity may help decrease U.S. reliance on China over time.
Will the U.S. and Intel come out of this on top? We’ll have to wait and see.
