Trump reveals Intel has agreed to deal for US to take 10 percent equity stake

Donald Trump confirmed that Intel has agreed to sell off 10 percent of the company to the US government in an $8.9billion investment that the president says will cost Americans nothing.

The largest chip manufacturer in the US has been in talks with Washington over a potential government stake in the company.

Trump has been concerned with Intel's future as it bleeds money under new CEO Lip-Bu Tan and America's reliance on TSCM, a chip manufacturer in Taiwan.

The president announced the deal on Truth Social Friday evening. 

'It is my Great Honor to report that the United States of America now fully owns and controls 10% of INTEL, a Great American Company that has an even more incredible future,' he said. 

'I negotiated this Deal with Lip-Bu Tan, the Highly Respected Chief Executive Officer of the Company. The United States paid nothing for these Shares, and the Shares are now valued at approximately $11 Billion Dollars.

'This is a great Deal for America and, also, a great Deal for INTEL. Building leading edge Semiconductors and Chips, which is what INTEL does, is fundamental to the future of our Nation. MAKE AMERICA GREAT AGAIN! Thank you for your attention to this matter.'

Intel revealed that the deal has been funded using the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program, all passed under Joe Biden. 

'As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world's most advanced technologies are American made,' said Tan in a statement. 

'President Trump's focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country's economic and national security. We are grateful for the confidence the President and the Administration have placed in Intel, and we look forward to working to advance U.S. technology and manufacturing leadership.' 

'Intel is excited to welcome the United States of America as a shareholder, helping to create the most advanced chips in the world,' added US Secretary of Commerce Howard Lutnick. 

'As more companies look to invest in America, this administration remains committed to reinforcing our country's dominance in artificial intelligence while strengthening our national security.' 

A spokesperson for Intel said that the government's investment makes it a 'passive' owner.

The White House will not have any representation on the company's board and with limited exceptions, will vote with the board on matters that need shareholder approval.  

Speaking with reporters on Friday, Trump said the deal came out of a meeting last week with Intel CEO Lip Bu Tan - which came days after the president called for Tan to resign over his past ties to China.

'I said, I think it would be good having the United States as your partner,' Trump said. 'He agreed, and they´ve agreed to do it.'

The struggling Silicon Valley chipmaker has a market cap of just over $100 billion. The agreement comes just after Japanese technology giant SoftBank Group disclosed Monday that it is accumulating its 2% stake in Intel.

In his second term, Trump has been leveraging his power to reprogram the operations of major computer chip companies. 

The administration is requiring Nvidia and Advanced Micro Devices, two companies whose chips are helping to power the craze around artificial intelligence, to pay a 15% commission on their sales of chips in China in exchange for export licenses.

Trump´s interest in Intel is also being driven by his desire to boost chip production in the U.S., which has been a focal point of the trade war that he has been waging throughout the world. 

By lessening the country's dependence on chips manufactured overseas, the president believes the U.S. will be better positioned to maintain its technological lead on China in the race to create artificial intelligence. 

'This feels like the Manhattan Project - or the run-up to World War II,' MIT AI computer scientist Dave Blundin said last week. 

'It's every bit as important as the space race was, as the nuclear arms race was. Actually, it's more important.' 

Intel's advanced abilities to manufacture semiconductors would allow the US to give up its reliance on foreign fabrication plants (fabs), especially in Taiwan which controls more than 60 percent of the market, in order to power artificial intelligence, defense and the economy. 

That´s what the president said August 7 in an unequivocal post calling for Tan to resign less than five months after the Santa Clara, California, company hired him. 

The demand was triggered by reports raising national security concerns about Tan´s past investments in Chinese tech companies while he was a venture capitalist. 

But Trump backed off after Tan professed his allegiance to the U.S. in a public letter to Intel employees and went to the White House to meet with the president, who applauded the Intel CEO for having an 'amazing story.' 

After enjoying decades of growth while its processors powered the personal computer boom, the company fell into a slump after missing the shift to the mobile computing era unleashed by the iPhone´s 2007 debut. 

Intel has fallen even farther behind in recent years during an artificial intelligence craze that has been a boon for Nvidia and AMD. 

The company lost nearly $19 billion last year and another $3.7 billion in the first six months of this year, prompting Tan to undertake a cost-cutting spree. 

By the end of this year, Tan expects Intel to have about 75,000 workers , a 25% reduction from the end of last year.

The move, according to AI and tech experts on Diamandis' podcast Moonshots, echoes the 'Manhattan Project' as a sort of a 'national survival strategy.' 

'The reason the US needs to protect Taiwan fundamentally... is because the fabs are there. If the fabs all move to the US, then why would the US defend Taiwan?' Blundin said. 

Concerns have been raised about the decision to nationalize the company, as he added: 'They're putting the whole industry on a kind of war footing, like mobilization for conflict, except the battleground is supply chains and chip fabs.' 

Although rare, it´s not unprecedented for the U.S. government to become a significant shareholder in a prominent company. 

One of the most notable instances occurred during the Great Recession in 2008 when the government injected nearly $50 billion into General Motors in return for a roughly 60% stake in the automaker at a time it was on the verge of bankruptcy. 

The government ended up with a roughly $10 billion loss after it sold its stock in GM.

U.S. Commerce Secretary Howard Lutnick told CNBC during a Tuesday interview that the government has no intention of meddling in Intel´s business, and will have its hands tied by holding non-voting shares in the company. 

But some analysts wonder if the Trump administration´s financial ties to Intel might prod more companies looking to curry favor with the president to increase their orders for the company´s chips.

Intel was among the biggest beneficiaries of the Biden administration´s CHIPS and Science Act, but it hasn´t been able to revive its fortunes while falling behind on construction projects spawned by the program.

The company has received about $2.2 billion of the $7.8 billion pledged under the incentives program - money that Lutnick derided as a 'giveaway' that would better serve U.S. taxpayers if it´s turned into Intel stock.