In a highly unusual move, the Trump administration on Monday announced an $8.9 billion investment in Intel, giving the US government a 9.9% stake in the company.

The investment will be funded through $5.7 billion in pending CHIPS and Science Act grants and $3.2 billion from the Secure Enclave program. Combined with $2.2 billion in earlier CHIPS grants, total government support for Intel now stands at $11.1 billion.

“As the only semiconductor company that does leading-edge logic R&D and manufacturing in the US, Intel is deeply committed to ensuring the world’s most advanced technologies are American-made,” Intel CEO Lip-Bu Tan said.

The agreement also provides the government with a five-year option to purchase an additional 5% of Intel shares at $20 per share, exercisable only if Intel’s ownership stake in its foundry business falls below 51%. Existing claw-back and profit-sharing provisions tied to earlier grants will be removed.

This follows SoftBank’s $2 billion investment in Intel, becoming one of its top shareholders. 

“The primary significance of the government’s investment is its powerful endorsement, reinforcing the belief that Intel is ‘too big to fail’. While this does not directly help Intel’s advanced node technology, it encourages the market to rerate the company’s Price-to-Book (P/B) ratio using a lower discount rate,” said Ming-Chi Kuo, market analyst at KGI Securities. He further added that this helps raise Intel’s valuation floor, improves its stock performance, and indirectly benefits its operations.

The chip maker has invested $108 billion in capital and $79 billion in research and development over the past five years, primarily in US-based manufacturing. The company is currently building new facilities in Arizona with high-volume production expected later this year.

Tan, who became CEO in March, has moved to strengthen Intel’s financials and execution. The new agreement, Intel said, will help advance its US manufacturing and technology expansion plans.

However, Intel has also flagged potential risks from the US government’s equity stake. In an SEC filing, the company warned that foreign customers or governments might retaliate or reconsider partnerships, a concern given that 76% of Intel’s revenue comes from overseas, including 29% from China.

Analysts believe the government’s involvement is a double-edged sword.“It encourages partnerships from industry, and we think that this means a higher chance of orders and partnerships from American fabless companies to avoid tariffs,” Doug O’Laughlin, president, SemiAnalysis, a research and analysis company specialising in the semiconductor and AI industries, told AIM.

He added that to win significant business, Intel must deliver on performance, cost, and time-to-market compared to TSMC, regardless of funding sources.

Intel’s Turnaround Gamble

After years of setbacks, Tan has aggressively retooled Intel’s strategy. He slashed thousands of jobs, cut costs, and reworked the troubled foundry plans pushed by former CEO Pat Gelsinger.

Notably, Intel is re-prioritising its process roadmap. According to recent reports, Tan is shifting focus from the 18A node to 14A for external customers. 

“The US needs Intel. The world needs Intel,” said Dylan Patel of SemiAnalysis in a recent interview, arguing that despite setbacks, Intel still holds a critical role in the semiconductor ecosystem. He added that while Intel lags TSMC, it remains ahead of Samsung in advanced process technology.

According to Patel, customers who have tested chips at both companies generally view Intel as “further along in 2nm-class process technology than Samsung”. That positions Intel as the clear second player behind TSMC.

Patel said that some investors have pushed for Intel to separate its design and foundry businesses, while cautioning against it. “The process of splitting Intel would take so much executive time and effort that the company could go bankrupt in the process.”

Competition and Product Roadmap 

This government-industry alignment must be weighed against the global competitive landscape. Taiwan’s TSMC remains the undisputed leader. It is building a $65+ billion cluster of Arizona fabs (with CHIPS grants and loans) to produce 2nm chips for Apple, NVIDIA, AMD and others.

Meanwhile, Samsung scored a major win this month. Tesla announced it would manufacture its next-generation A16 chip at Samsung Foundry’s Taylor, Texas, facility. For Samsung, long trailing TSMC, this marks both a symbolic and practical boost in the US market.

Intel, by contrast, is racing to prove that 14A can attract external customers. Without landing a marquee client such as Apple, NVIDIA, or AMD, Intel has warned it may even exit the leading-edge foundry business if it fails to secure customers for 14A.

O’Laughlin said the focus on 14A is to listen to customers early in the design cycle and attract a major whale customer (e.g. mobile), as Intel’s internal products alone would not generate enough volumes to make up for the development cost.

On the other hand, Intel’s 18A node, powering its upcoming ‘Panther Lake’ client CPUs, is now positioned primarily as an internal ramp. The real bet for external customers comes with the next-gen 14A process, which Intel says will be competitive with TSMC’s leading-edge offerings.

Beyond CPUs, Intel is also expanding its GPU and accelerator lineup. In mid-2025, Intel unveiled the Arc Pro B60/B50 GPUs for workstation AI and launched Gaudi 3 AI accelerators for data-centre inference. 

Despite the product launches, technical challenges loom. Recent reports from Reuters indicate Intel’s 18A process has struggled with low yields on its first chips, meaning only a small fraction of manufactured dies are currently usable.

“Gaudi is not competitive, and Jaguar Shores remains questionable with an unproven software stack,” said analyst Gerald Wong from SemiAnalysis.

“Panther Lake only serves to maintain Intel’s leading position in the mobile PC space. If Intel can increase its margins from using 18A, that would help with attracting external customers,” he added.

However, Intel CFO David Zinsner expressed confidence during an interview that yields will improve by year-end, but many investors note that Intel’s turnaround depends on these next-generation nodes achieving volume viability. And crucially, foundry success hinges on landing big outside customers.

​​In summary, the government’s $8.9B equity investment is about more than balance sheets – it’s about geopolitics and supply chain strategy. For Intel, it provides a bolstered balance sheet to fund fabs and R&D in the US while management tries to restore technical leadership and attract foundry clients.

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